Thomas E. Petri: “this amendment should be much less controversial than the one that just passed. As you're aware, the Federal Government…”

“this amendment should be much less controversial than the one that just passed. As you're aware, the Federal Government runs two Federal student loan programs that provide the same affordable loans to American students: the Federal Family Education or Guaranteed Loan Program, and the William D. Ford Direct Loan Program. In the past year, a significant amount of attention has been paid to the scandal-ridden and wasteful guaranteed loan program. Reducing excessive subsidies was the primary goal of the bipartisan College Cost Reduction and Access Act that was enacted last September, and we have seen some success. But this program was so embroiled with illegal and unethical activity between lenders and financial aid officers that sweeping new rules are included in this higher education reform act aimed at ending these relationships and providing much greater transparency for students and for taxpayers. Given all of the abuse that's occurred in the guaranteed program, imagine my surprise when an amendment ended up being adopted which had the effect of targeting the direct loan program and a seemingly innocuous amendment to audit the direct loan program contained a series of reporting requirements applied only to the direct loan program which were designed to make it appear the program was performing more poorly than the tarnished guaranteed program.”