- The Washington Times - Tuesday, April 30, 2002

The White House has suggested $5.2 billion in savings from federal student loans and other programs to ease a budget crunch, but most of the ideas are hitting a stone wall on Capitol Hill.
White House Budget Director Mitchell E. Daniels Jr. last week proposed the savings to House Speaker J. Dennis Hastert, Illinois Republican, as a way to balance the burgeoning costs of President Bush's proposed $27.1 billion counterterrorism package. Uncertainty over how to restrict the measure's size has forced a House committee to postpone work on it until next week.
Mr. Daniels proposed other savings from farm export subsidies, public housing and a job-training program, and $2.2 billion worth of cuts in projects lawmakers had won for their home districts.
From the list, obtained yesterday by the Associated Press, Mr. Daniels suggested that Republicans choose $650 million in savings to pay for aid to states for improved voting equipment and procedures, and $1.3 billion to cover a shortfall in Pell grants for lower-income college students.
Many lawmakers want to add both items to the anti-terrorism bill, but House leaders have ordered the Appropriations Committee to hold the bill's price tag to Mr. Bush's $27.1 billion.
Among Mr. Daniels' proposed savings is to require college students and graduates who wish to consolidate their government-backed education loans to use variable interest rates. The change from the current program, which lets the borrowers lock in today's low rates, is projected to save the government $1.3 billion.
The current fixed-rate consolidation loans "can result in significant federal costs, have higher average costs to borrowers and can have a destabilizing effect on the guaranteed loan program," the White House document says.
The administration proposal has run into objections from congressional Democrats and Republicans alike. Critics say it would force higher long-range costs on student borrowers while benefiting lenders like Sallie Mae, the nation's largest source of education loans.
"We shouldn't increase the interest rates they will be paying as a back-door way of supplementing the federal budget," said Rep. Ralph Regula, Ohio Republican, who chairs the House Appropriations subcommittee that oversees education spending.
"It is equivalent to a huge tax increase on students who will be struggling to make ends meet after graduation," said Ranit Schmelzer, spokeswoman for Senate Majority Leader Tom Daschle, South Dakota Democrat. "This is a proposal that Senate Democrats strongly object to, and it will not become law."
Another broadside came yesterday from Sen. Edward M. Kennedy, Massachusetts Democrat and chairman of the Senate Health, Education, Labor and Pensions Committee, who promised to sink the plan.
"The Bush administration is slashing education to pay for more and more tax breaks for the wealthiest Americans," Mr. Kennedy said in a speech at Northeastern University in Boston.

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