Thomas E. Petri: “Mr. Chairman, this bill contains legislative provisions concerning the new direct student loan program that would…”

“Mr. Chairman, this bill contains legislative provisions concerning the new direct student loan program that would severely damage the Department of Education's ability to manage that program effectively; and that constitutes blatant protection for special interests at the taxpayers' expense. The bill cuts student loan administrative funds from $550 million to $320 million, and reserves half of that for the guarantee agencies. Since the guarantee agencies were projected to receive only $156 million based on this year's ACA formula and next year's projected loan volume, they are guaranteed a $4 million increase by this bill, and it could be more. Meanwhile, funds available for the Department are cut from $394 to $160 million. That's a cut of $234 million, or 60 percent. The Department says it could easily live with a $100 million cut, and perhaps it could absorb somewhat more. But a 60 percent cut is nothing more than a clear attempt to totally gut the administration of direct loans. This is a stealth attack on that program carried out in this appropriations bill where it does not belong, before the proper authorizing committee has considered the issue. Now when we are cutting everything else, why on Earth are we guaranteeing an increase of at least $4 million, and possibly much more, for these guarantee agencies? Is this the Guarantee Agency Protection Act? This is ridiculous.”