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Written by: Cody Brumfield
Published: 06/01/2005 House Government Reform Committee Hearing Focuses on Student Loan Programs
The U.S. House of Representatives Committee on Government Reform held an oversight hearing May 26 to consider whether federal student loan programs are meeting the needs of students and institutions. Specifically the committee had hoped to focus on the reasons and impetus for the removal of the Student Financial Aid Programs from the Government Accountability Office’s (GAO) list of high risk government programs in January of this year, and what is currently being done to avoid the waste, fraud and abuse that led to the programs placement there in the first place.
The hearing, however, largely devolved into a discussion of the “complex cost estimates,” associated with the two competing federal student loan programs—the Direct Loan (DL) and Federal Family Education Loan (FFEL) programs, reports the Chronicle of Higher Education.
The Committee heard from two panels of witnesses that included Teri Shaw, Chief Operating Officer of the Student Financial Aid office at the U.S. Department of Education; John P. Higgins, Jr. the Inspector General at the U.S. Department of Education; Dr. Alan Merten the President of George Mason University; Sarah Bauder the Director of Student Financial Aid at the University of Maryland; Nancy Coolidge the coordinator of Federal Student Financial Support in the Office of the President at the University of California; Natala Hart the Director of Student Financial Aid at The Ohio State University; and Cynthia Thornton the Director of Student Financial Aid at Dillard University.
According to the Chronicle of Higher Education, the Bush administration states “in its annual budget requests that student loans made through the guaranteed program cost the government $11 more for every $100 lent than do loans made with U.S. Treasury funds through direct lending.” A recent report by several independent groups, including AACRAO, estimated that the government would save roughly $4.4 billion if all loans were made through the more efficient student loan program. Congressional Republicans have openly questioned the Bush administration's calculations and have asked the GAO to provide a report on “the hidden costs” of Direct Lending.
“Until we get the GAO report, we don't know what we're talking about.” noted Representative Davis at the hearing. The GAO is an independent, nonpartisan investigative agency established by Congress.
Witnesses spoke specifically about a bipartisan piece of legislation called the “STAR Act” and about several initiatives to enhance loan delivery. Further they cited the importance of competition between the two loan programs—DL and FFEL—in spurring innovation, ensuring streamlined delivery of funds, and maintaining low costs.
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