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

   FOR RELEASE                               Contact: Kathryn Kahler    July 27, 1995                                      (202) 401-3026

Statement by Under Secretary of Education Marshall Smith regarding new Congressional Budget Office (CBO) report on projected savings under the Direct Student Loan Program

We are seeing an unprecedented campaign to confuse a simple issue, protect vested interests, and open federal student aid programs to widespread fraud and abuse.

This is simply garbage in, garbage out.

While their first report applied widely accepted standards for assessing costs over time, CBO is now using politically driven 'scoring' to falsely deflate the obvious savings associated with direct lending.

Why should bankers and their middlemen continue to receive virtually risk-free, federally guaranteed profits -- at a time when there is a bipartisan consensus that the budget should be balanced?

When coupled with last week's House Appropriations Committee action -- supported by banking industry ads and a high-priced PR machine -- we can clearly see a venal assault on student aid. And who benefits?

Putting bankers first is not good public policy. It's a private bonanza.

President Clinton's 10-year balanced budget plan protects the in-school interest exemption for all students with documented savings under direct lending. The choice here is between helping bankers and special interests or helping students. The Congressmen want to help bankers and special interests. We are helping students and taxpayers.