White House opposes House higher education bill

2008-02-06T17:29:00.000-08:00

Wed Feb 6, 2008 5:30pm EST

By Kevin Drawbaugh

WASHINGTON (Reuters) - The Bush administration said on Wednesday it "strongly opposes" a bill to crack down on abusive market practices in the student loan industry that is set for a U.S. House of Representatives vote on Thursday.

The White House said it opposes the bill, which has already been approved by the House Education and Labor Committee, because it would restrict regulators' authority on college accreditation and create dozens of new federal programs.

A Democratic spokesman for the committee said the bill would make college more affordable and accessible and that it passed the committee in November with bipartisan support.

"Only the Bush administration, which has repeatedly broken its promises to college students over the last seven years, could conjure up reasons to oppose a bill that has such broad support from members of Congress, students, and the higher education community," said committee spokesman Tom Kiley.

Three key House Republicans, including ranking committee member Rep. Howard McKeon of California, distributed a statement earlier in the day urging support for "critical college cost reforms" contained in the House bill.

The administration said in a statement that it opposes the House bill's proposal to withhold federal grant funding from colleges that raise their tuition rates too quickly.

"The administration supports reauthorizing the Higher Education Act (HEA) ... in a manner that makes higher education more accessible, affordable, and accountable," the statement said, adding that the administration "looks forward to working with the Congress."

But it questioned many aspects of the House legislation, saying for instance that it poses constitutional concerns over new programs that it said "would prioritize or restrict eligibility to institutions or groups defined by racial or ethnic criteria, including express racial enrollment quotas."

The administration also said it also opposes a part of the bill that would mandate greater review of settlement agreements by the Education Department that top $1 million in value.

The House floor vote will come at a tough time for higher education funding and the student loan industry.

On Monday, President George W. Bush proposed a fiscal 2009 budget that would hold federal student financial aid flat on a net basis. At the same time, a leading credit rating agency cut its ratings on top student lender Sallie Mae, formally known as SLM Corp, and said it may cut them further.

Congress last year enacted legislation slashing federal subsidies paid to student lenders including Sallie and others.

(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)