Get Ready for a showdown between federal taxpayers and student loan middlemen as Congress decides whether to accept proposed legislative riders on the massive 1996 appropriations bill. Congress has inserted a variety of “special interest” provisions that would affect the taxpayer interest in the Federal Family Education Loan (FFEL) and Direct Loan programs. If passed, the riders would hand a lucrative prize to the student loan industry and leave the federal taxpayer to pick up the tab.

The Direct Loan program was established as a pilot program in a bipartisan effort under President Bush, and expanded under President Clinton, to devise a less costly alternative to the problem-plagued FFEL program. The Direct Loan program was designed to operate through a market-based incentive program. This has worked better than the old system, where subsidies to the loan industry intermediaries were politically determined.

But the bankers and guaranty agencies are hanging onto their subsidies and trying to cap the share of loans made through the Direct Loan program.

Taxpayers for Common Sense wants Congress to put the public interest before the narrow interest of the student loan middlemen by dropping these riders. TCS sent a letter to the House and Senate on April 23 detailing its reasons.
Snip-Its: Reactor and grazing subsidies up for vote this week.

The House Resources Committee is expected to act on legislation on April 25 which would continue the government’s policy of charging below-market rates to graze livestock on federal lands. Also, the House Science Committee is scheduled to mark up energy research and development legislation on April 25. The legislation includes the Advanced Light Water Reactor program which gives away millions of dollars to profitable companies including General Electric and Westinghouse.

Congress votes “yes” on highway pork

On April 17 the House approved legislation by a vote of 284 to 143 that would provide off-budget treatment for the Highway Trust Fund. According to the U.S. Office of Management and Budget and the U.S. Congressional Budget Office, taking the Fund off-budget will increase the federal deficit by $20 billion over the next five years. This bill is a disaster.