April 28, 1998
The Administration is strongly committed to working with Congress to
reauthorize the Higher Education Act (HEA) this year. The Administration
has serious concerns with several provisions that are in the bill or likely
to be added, but is encouraged that H.R. 6, as reported by the House
Committee on Education and the Workforce, reflects many of the
Administration's proposals, particularly the authorization for the High
Hopes for College initiative.
Unfortunately, there are a number of highly problematic provisions in the reported bill, such as the repeal of funding for the National Board for Professional Teaching Standards, a change to the student loan interest rate structure that provides excessive profits to lenders and requires unnecessary new spending, and significantly increased payments to guaranty agencies and insufficient funding for the Department of Education to manage effectively all of the student aid programs. Further, the Administration understands that provisions may be added to the bill that are also strongly objectionable, such as an amendment to incorporate the text of H.R. 3330, the so-called Anti-Discrimination in College Admissions Act of 1998. Overall, if such provisions are in the bill as presented to the President, particularly in light of other concerns raised in this Statement of Administration Policy, the President's senior advisers would recommend that he veto H.R. 6.
National Board for Professional Teaching Standards. The National Board recognizes and rewards excellent teachers who thereby become an observable standard of excellence to which other teachers can aspire. Upgrading the teaching corps and raising teaching standards in this way is a key element necessary for long-term improvement in student achievement.
Student Loan Interest Rates. The Administration cannot accept the bill's provisions that would provide lenders with excessive profits and require taxpayers to finance those profits through an additional $2.7 billion subsidy to lenders over five years. Most of the additional $2.7 billion of spending is not offset in the bill and therefore would trigger a possible sequester of several entitlement programs specified in law. Statutorily set lender subsidies are not necessary to ensure access to Federal Family Education Loans (FFEL), and they ignore promising market-based solutions, such as an auction mechanism, for addressing concerns expressed by the lender community. A policy that moves toward an auction mechanism should be part of the interest rate structure.
A budget sequester would raise student loan origination fees -- which are already too high -- and reduce Federal mandatory spending across-the-board. Vital programs such as vocational rehabilitation, foster care and adoption assistance, and Medicare should not have to bear the cost of lender subsidies.
H.R. 3330. The Administration strongly opposes H.R. 3330, which may be offered as an amendment during House consideration of H.R. 6. The Administration strongly supports properly constructed affirmative action to achieve the compelling interest of eradicating the effects of discrimination or promoting the educational benefits of diversity. For Congress to deny Federal funds to institutions that promote such efforts would unduly constrain their ability to meet their constitutional obligations and would be an unwarranted Federal intrusion into the freedom of public and private institutions to establish their own admissions policies.
Section 458 Funding Reductions. The Administration strongly opposes provisions in H.R. 6 that would reduce administrative funds available to the Department of Education under section 458 of the HEA by more than $220 million during fiscal years 1999 to 2003, while increasing administrative payments to guaranty agencies by roughly $350 million during that period. These provisions directly threaten the Department's ability to manage the over $50 billion annual Federal investment in student financial aid by taking away the funds necessary to carry out vital activities, such as student aid application processing, student loan default collection, and urgently needed modernization of student aid delivery systems.
In addition, there are other significant provisions in H.R. 6 that the Administration will seek to improve during further congressional consideration. Among these issues are the following.
The Administration looks forward to working with Congress to resolve these and other issues, such as those articulated in more detailed letters from concerned departments, as Congress works to reauthorize the Higher Education Act.
H.R. 6 would increase direct spending; therefore, is subject to the pay-as-you-go requirements of the Omnibus Budget Reconciliation Act of 1990. The bill does not contain provisions to fully offset this increase in outlays. Therefore, if the bill were enacted, its deficit effects could contribute to a sequester of mandatory programs. OMB's preliminary scoring of this bill is that it would increase outlays by $2,061 million during FYs 1998-2003:
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