The following is cross-posted at www.fiscalaccountabiilty.org:
Largely unnoticed because of the big health care debate that is overshadowing all other legislative business, there is a piece of legislation that may be brought to a vote as early as tonight or tomorrow that stands to have severe consequences for American taxpayers.
The bill, euphemistically-named "Student Aid and Fiscal Responsibility Act," is fraught with many problems relating to cost, the creation of new entitlements, and costly mandates including "green school" mandates and Davis-Bacon prevailing wage requirements. More than anything, though, the bill would ultimately lead to the nationalization of yet another industry by barring private lenders from making government-guaranteed loans.
CFA is sending a letter to all members of the U.S. House of Representatives urging opposition to the bill, and we will also be rating a vote against it.
From our letter:
First, the bill, which would replace the Federal Family Education Loan program with direct loans made by the Department of Education, carries a huge price tag. Proponents may be touting the bill as a way to save money, but reality paints a different picture. While the original CBO score, which identified a likely net cost to taxpayers remains the official estimate due to budgeting rules, correspondence from CBO Director Douglas W. Elmendorf confirms that SAFRA and the expansion of direct spending to the Pell Grant program contained in the bill could cost taxpayers up to $49.9 billion over ten years after accounting for lending risk.
With the government seizing control of student lending, the bill continues the current troublesome trend towards nationalizing entire industries.
It would further create ten new entitlement programs, and contains “ green school” requirements. Saddling already costly school-construction programs with additional federal regulations will certainly drive up costs, and the fact that the bill would not only seek to impose “green” standards, but would also apply Davis-Bacon prevailing wage mandates only aggravates the burden this bill would impose.