Thomas E. Petri: “Mr. Chairman, the Higher Education Act is one of the supremely important laws which comes before this House. It has wide…”

“Mr. Chairman, the Higher Education Act is one of the supremely important laws which comes before this House. It has wide ramifications for our society and for our economy. I want to commend my full and my subcommittee chairmen and my colleagues on the Committee on Education and the Workforce who have worked so diligently on this reauthorization, even as I comment on one disturbing aspect of it. In the history of guaranteed student loans, what the students paid has always been what the banks received, with the exception of in-school interest on subsidized loans and interest above a capped amount, which have been paid to the banks by the government. That has been true until now. Under this bill, H.R. 6, for the first time this link will be broken. The banks will receive one-half percent more interest than the student borrowers pay, with the taxpayer paying the extra one-half point to the banks on every loan for as long as that loan is outstanding. That is an administrative monster as well as a huge cost increaser. Why are we doing this? Because the banks swear on a stack of Bibles that they will lose money if we cut them further. They will drop out of the program and students will not get loans. Mr. Chairman, I have heard that particular Chicken Little before.”