A r c h i v e d I n f o r m a t i o n

   FOR RELEASE                              Contact:  Kathryn Kahler    September 26, 1995                                 (202) 401-3026

Statement by U.S. Secretary of Education Richard Riley Regarding Labor and Human Resources Committee Vote on Budget Reconciliation

The reconciliation bill reported out of the Senate Labor and Human Resources committee today is a giant step backwards for students, parents, colleges and taxpayers.

Students lose because they will incur even greater debt for the cost of their college education with the elimination of the interest subsidy that now covers the six-month "grace" period between the time they complete their education and begin repaying their loans.

Parents lose because they will pay higher interest on the PLUS loans that help finance their children's postsecondary education.

Colleges lose because they will be taxed for every loan their students receive. They also lose because the bill caps direct loans at 20 percent of loan volume, which means some schools will be kicked out of this highly acclaimed program, other schools that planned to go into direct lending next year will not be able to do so. Schools no longer have the choice to decide what works best for their students or for them.

Taxpayers lose because direct lending would have saved billions of dollars, and also because the reconciliation bill hands over more than $1.8 billion in federal funds and assets to special interests.

In effect, the Senate has given away $1.8 billion in taxpayers' money at the same time that it imposes a user fee on schools that educate the neediest students in our country.

Under President Clinton's plan to balance the budget, the student aid that helps our young people realize the dream of a college education is protected, not diminished. Students, parents, colleges and taxpayers come out winners, not losers.