(H.R. 3221) On the Guthrie of Kentucky amendment that would have extended an existing government-guaranteed student loan program operated by financial institutions, rather than changing to one in which the government directly issues student loans; the amendment would also have removed a number of new educational spending programs from the bill, including one that greatly expanded federal funding for community colleges
This was a vote on an amendment offered by Rep Guthrie (R-KY) to the Student Aid and Fiscal Responsibility Act of 2009. That legislation was designed so that all new federal student loans would be originated directly by the federal government, rather than by private lenders issuing federally-guaranteed loans. The amendment would have cancelled that change, and instead extended and expanded the existing federally-guaranteed loan program operated by financial institutions. The amendment would also have created a commission to develop a new private sector model for student lending. In addition, the amendment would have removed a number of new educational spending programs from the bill, including one that greatly expanded federal funding for community colleges.
Speaking on behalf of his amendment, Rep. Guthrie said the current loan program should be expanded because that will preserve and ensure “stability and continuity for both students and schools” by using programs that are “working on campuses all around the country . . . .” He cited, as evidence of the effectiveness of the guaranteed student loan program, the fact that colleges and universities “would have joined the Direct Loan Program by now, but they haven't.” Guthrie also argued that the current program “provides a federal backstop to ensure there is no interruption in funding for students”, despite the ongoing credit shortage. He claimed that the current program “offers the flexibility for private capital to return as economic conditions improve.”
Guthrie went on to say that continuing the existing program will give the government time “to pursue real student loan reform”, will “preserve choice and competition for borrowers preventing waste, fraud and abuse (and will avoid) . . . a massive infliction of debt on future generations.”
Rep. Andrews (D-NJ), acknowledged that the amendment, like H.R. 3221, “recognizes the need for substantial reform in the federal student loan program.” However, he opposed the amendment, in part because it would “saves about $17 billion less than the approach that (of) the underlying bill . . . (by subsidizing) private institutions that take a risk with taxpayer money.” Andrews also criticized the amendment because it would remove the provisions that provided additional funding for community colleges that he said “are burgeoning with new enrollees who need an education because of the tumultuous circumstances in our economy.”
The amendment was defeated by a vote of 165-265. All one hundred and sixty-five “aye’ votes were cast by Republicans. Eight other Republicans joined all two hundred and fifty-seven Democrats and voted “nay”. As a result, the provisions under which the student loan program became a direct federal loan program operated by financial institutions, and in which aid was expanded to community colleges, both remained in H.R. 3221.