Taxpayer-Teacher Protection Act of 2004

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5186) to reduce certain special allowance payments and provide additional teacher loan forgiveness on Federal student loans, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 5186.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today the House has an opportunity to pass a bill that will protect taxpayers, support school teachers and help poor schools ensure every student has the opportunity to learn from a qualified teacher.

I want to particularly thank my colleague, the gentleman from California (Mr. McKeon) and the gentleman from South Carolina (Mr. Wilson) for the vital roles they have played for bringing this bill to the floor.

For more than 10 years, a complex Federal policy known as the 9.5 percent ``special allowance'' has resulted in excess taxpayer subsidies for some student loan providers. This policy was adopted under the Clinton administration, and while some would call it a loophole, the loan providers were told by the Clinton administration that it was perfectly legal and legitimate.

The excess taxpayer subsidies being paid under this policy have in recent years begun to balloon, and if we fail to act, billions of dollars in excess taxpayer subsidies will be paid to student loan providers legally.

Now, this may be technically legal but I think it is unfair to taxpayers and unfair to students, and it is unfair to the schools, people who should be the beneficiaries of this funding. When you boil it down, it is just plain bad policy.

Eight months ago President Bush called on Congress to pass legislation to shut down these excess taxpayer subsidies. The Bush administration noted that ending the excess subsidies without legislation was likely to take at least 2 years. Because of the precedents established under the previous administration, it would take the administration 2 years to end the policy without legislation. Two years is too long to wait.

So the President asked Congress to pass legislation this year that would allow the 9.5 percent subsidies to be stopped now.

The legislation before us should be a no-brainer. It is called the Taxpayer-Teacher Protection Act because that is exactly what it will do. The bill will protect taxpayers by shutting down the excess subsidies to lenders, as the President has asked, and it will use the money to help teachers and poor schools across the country.

Rural and urban schools are confronting a shortage of qualified teachers in key subjects. This shortage is very serious and particularly hurts schools in our poorest communities.

According to the most recent data available from the National Center for Education Statistics, 67 percent of our public middle and high schools have vacancies in special education, 70 percent had vacancies in mathematics, 61 percent had vacancies in biological or life sciences. And according to the Committee For Economic Development, almost a third of high school math classes are taught by teachers who did not major or even minor in mathematics. For biology it is 45 percent, and in life sciences the percentage rises to 60 percent.

President Bush has repeatedly asked Congress to create new incentives for good teachers to teach in our poorest schools. The President has asked that we increase the amount of loan forgiveness that is available to qualified teachers in these key subjects who agree to teach for at least 5 years in our poorest schools. The President wants us to increase loan relief for the teachers from the current maximum of $5,000 to a new maximum of $17,500, more than triple the amount that is currently available.

The President asked us to do this after the No Child Left Behind Act became law. And he asked for it again last week in Springfield, Ohio, where I was with him at an education event.

Under this bill we will shut down the excess subsidies for now and use the money to provide loan relief for highly qualified teachers in high-needs schools, helping our schools deal with the teacher shortage.

The House last year overwhelmingly passed legislation written by the gentleman from South Carolina (Mr. Wilson) that called for similar teacher loan relief. Shutting off these excess subsidies now via this bill will also pave the way for us to devote billions of dollars over the next several years to college access programs for low- and middle- income students.

This was the original intent of the bill introduced by the gentleman from California (Mr. McKeon) and I back in May. And that bill, the College Access and Opportunity Act, would permanently shut down the excess subsidies as part of a comprehensive reauthorization of the Higher Education Act.

We continue to believe a long-term, multiyear reauthorization of the Higher Education Act is the proper vehicle for ensuring that the 9.5 percent subsidies stay shut down, because it would ensure that billions of dollars are used to expand college access for low- and middle-income students.

Let us make no mistake about this. We are closing the loophole, and once it is closed, it is not coming back. The only question today is whether Democrats and Republicans can agree on how the money should be used within the Higher Education Act.

We could not find an agreement on the big question of the reauthorizing the bill this year, and unfortunately, this looks like that debate will continue into next year. But in the meantime this bill gives us the chance to close down the subsidies now and use the money for something we can all agree is a worthy cause.

Now, there are some who say this bill does not go far enough. They contend it should shut down subsidies retroactively. Let me say, here is the problem with that.

Shutting the 9.5 percent subsidies down retroactively will not just affect the big kids on the block, those in the student loan business who do it for a profit. It will affect smaller, nonprofit student aid providers all across America, nonprofit organizations that were told years ago by the Federal Government that this practice is 100 percent legal and legitimate. And as we will see

as this debate goes on, we are talking about nonprofit student aid organizations from all over the country, whether it be the big student aid organization in California, where 85 percent of their effort is aimed at minority children, and Texas, Arizona, all across the country.

Over the past few days Congress has heard an earful from nonprofit student aid providers warning that retroactive cuts would hurt students and families that need help paying for college. We have heard from Chela in California and we have heard from a provider in South Texas. Half of their loans go to Hispanic students, all needy students.

We have heard from nonprofit providers in New Mexico, Rhode Island, Oklahoma. ``Cuts in these subsidies, especially retroactive cuts, would immediately cause a negative impact to Iowa students,'' warned a nonprofit organization in Iowa.

Now, we need to shut down the subsidies, but we need to make sure that we are not shutting down nonprofit student aid organizations in the process. And if we go any further than what we propose in this bill, I think we are going to hurt the very families and students that we are actually trying to help.

So I would urge my colleagues to support the measure on the floor today. It is the right thing to do for our taxpayers, teachers and American students.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I would remind my colleagues that we are less than 4 weeks from a Presidential election and an election for all of us who serve here in the House. We all know what happens when we get to the eve of election. We all find religion.

Now, the President called for the elimination of this 9.5 percent subsidy back in February. I have been working on this for a year. It was in the gentleman from California's (Mr. McKeon) and my bill that we introduced back in May, and my colleagues on the other side want to criticize us for not acting sooner. Yet, the substitute, or their own higher education reauthorization, never even addressed this very subject.

Now, I would say to my colleagues it takes two to tango, and they all know how things get done around here. We need to work together.

The criticism about this bill not going far enough, I think, is well understood by Members on both sides of the aisle. While, in fact, it may shut down some subsidies that go to for-profit lenders, the problem we have is those lenders in the nonprofit sector who use that money to aid students and needy students will be burned in the process, and I think we take a great risk in going down that path today.

That is why the bill that we have before us shuts these things down, these 9.5 percent loans, for the next year and allows us, in the reauthorization of the Higher Education Act, to make sure that when we shut these 9.5 percent loans down permanently, we do so in a way that we do not hurt the nonprofit community that helped many low-income and needy students around the country.

Mr. Speaker, I yield 2 minutes to the gentleman from Nevada (Mr. Porter).

Mr. Speaker, I am pleased to yield 2 minutes to the gentleman from Georgia (Mr. Gingrey), a member of our committee.

Mr. Speaker, I yield myself the balance of my time.

Mr. Speaker, I never cease to be amazed at what happens during political silly season here in the Nation's Capital.

Here we are on the eve of an election and we are going to have a virtual unanimous vote on this bill. Even though my colleagues on the other side have criticized it so much, for a bill that sounds as bad as they have criticized it, I am wondering why they are going to vote for it.

But I want to say, Welcome. Welcome. They are taking credit for stumbling across this billion-dollar excess subsidies when we have been working on this for about a year to try to shut this down in a reasonable and responsible way. And while I know that people want to go all the way and shut it down and be really tough, what about those nonprofit student aid organizations around the country who have these loans, who use those excess profits to help low-income students and mostly minority students all over the country?

Let us stop the nonsense. Let us get on to do the people's work. By passage of this bill today, we will end this practice for the most part for the next year, use those savings to help expand the need for high quality teachers in title I schools in math, science and special ed, and help more students get a better chance at an education.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I offer a motion to instruct conferees.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, this motion to instruct House conferees is straightforward. It is a motion to insist on the highest possible level of funding for each homeland security first responder, domestic preparedness, flood map and disaster mitigation program in the bill.

In the conference on the fiscal 2005 Homeland Security appropriations bill, we have the opportunity to provide additional homeland security resources to close known security gaps and to strengthen our first responders.

Going to the higher funding levels for each of these programs means that we would provide $945 million more than the House-passed bill. We should instruct our conferees to do just that.

We all know that first responders, our local police, firefighters, the emergency response personnel, will be the first at the scene of a terrorist attack. We know only too well how many of them lost their lives on 9/11.

Yet, the Senate bill provides $400 million less for the Office of Domestic Preparedness grant programs than the House bill does. This motion would direct conferees to include the highest level for each of the programs funded under ODP.

The conferees should insist on the $1.25 billion provided by the House for the formula-based preparedness grants to all States.

The conferees should insist on $500 million provided by the House for law enforcement preparedness grants to all States.

The conferees should insist on the $1.3 billion provided by the Senate for urban area security grants.

The conferees should insist on the $50 million provided by the House for metropolitan medical response system grants.

We should insist on the $236 million the Senate provided for emergency management performance grants. These grants directly support the States' emergency management programs.

The conferees should also insist on the additional $100 million provided by the Senate for fire grant programs, which would still only fund our fire departments at this year's level.

A year ago, the Council on Foreign Relations released a report entitled, First Responders: Drastically Underfunded, Dangerously Unprepared. The report stated that billions of dollars, $98 billion specifically, are needed to properly equip first responders. Yet, the Bush administration and the Congress continues to cut this funding, not increase it.

Another recent survey shows that fire department needs are immense and are not being met. Is this where we should be 3 years after 9/11?

The motion also addresses funding for our border patrol and immigration investigation operations. A recent Time magazine cover story entitled, ``Who left the door open?'' exposes the weaknesses in our land border security efforts. These are troubling homeland security gaps that we must fix.

While these problems cannot be solved by money alone, additional funding is critical to help harden our security barriers, increase our deportation efforts, and expand our border patrols. We should provide these resources.

House conferees should be instructed to insist on the additional $211 million that the Senate provided for northern border air surveillance operations. We have not yet done what we need to do to protect our northern border.

House conferees should be instructed to insist on the $136 million the Senate provided for increased alien detention efforts, including additional bed space and detention alternatives.

As the 9/11 Commission noted, we have an immigration system that is ``not able to deliver on its basic commitments, much less support counterterrorism.''

The Air Marshal program is also critical to enhancing our aviation security. The Bush administration has allowed the number of air marshals to fall below the levels they recommended after 9/11. The Senate bill contains an additional $50 million to increase the number of air marshals. House conferees should be instructed to insist on this higher funding.

At the current rate, it will take over 10 years to install checked baggage explosive detection systems in airports with the most critical problems. While TSA is trying to replace unwieldy temporary systems with permanent explosive screening solutions, our progress in this effort is directly related to resources. The Senate bill contains $96 million more than the House. Conferees should be instructed to insist on the higher funding level.

The recent hurricane and flooding reminded us how important it is for communities to have accurately mapped flood areas and funding to mitigate disasters so they do not recur. The Senate bill provides $100 million more than the House for these efforts. Our conferees should be instructed to insist on this higher funding.

All of these programs are needed to close homeland security gaps and better prepare our Nation. The motion to instruct directs the House conferees to agree to the highest funding levels possible for homeland security, first responder, domestic preparedness, flood map and disaster mitigation programs.

We should be doing all we can to close known security gaps today so that we are not sorry tomorrow.

Mr. Speaker, I urge adoption of this motion to instruct.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the distinguished ranking Democrat on the House Committee on Appropriations, the gentleman from Wisconsin (Mr. Obey).

Mr. Speaker, I yield myself such time as I may consume, before I yield to the gentleman from Texas, to make just a couple of comments.

I am not sure we get anyplace by talking about who has been at meetings or who has not. I have been at lots of meetings with the ranking member as it relates to Homeland Security. I also have been at lots of meetings that do not relate to Homeland Security but relate to another subcommittee I am on in which Mr. Obey has been at. Frankly, it is interesting to hear intelligence from two different perspectives. It is helpful at times. Other times, they still leave you wishing you knew more.

But let me just make this observation. It is true we have limited dollars. It is also true we have an immense new challenge. I hear all this rhetoric that we are in a war on terrorism and that we are and have potential targets in

this country. It only strikes me from open and closed hearings that I have been at that we are pretty casual about the threat we face in this country.

Clearly, we have spent billions, and some progress has been made. But the gaps are there, and they are large and they are substantial. It is always impossible to deal with every potential gap that someone can think of. That is impossible in a free society. On the other hand, we know that there are large targets in this country that, frankly, we have not done enough about. We also know that there are significant gaps in the funding of our first responders, and we know that in the last couple of years, rather than going forward, we are going backwards in the funding of first responders in this country.

This committee and this House have been better than the administration. The administration has regularly cut funding in their budgets for first responders. We have added, but have not been able to add back everything they are cutting. And we are into this same pattern again. The bills that we have will be significantly better than what the administration requested. But what the administration requests as it relates to first responders in this country is simply tragic.

Mr. Speaker, I yield 5 minutes to my good friend, the gentleman from Texas (Mr. Turner), the ranking Democrat on the Select Committee on Homeland Security.

Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Obey).

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I yield myself 3 minutes.

Let me say at the outset, that the Members on this side of the aisle enthusiastically support this legislation brought to the floor by the chairman of the committee and the chairman of the subcommittee. We only ask, what has been holding it up? Why were you not here earlier? But you are here now and we will celebrate the fact that you are here now.

I must say that we were excited when the gentleman from Maryland (Mr. Van Hollen) and the gentleman from Michigan (Mr. Kildee) were able to get an amendment this past September onto the floor of the House so we could get this issue in front of the House, get it out into the daylight and let the Members work the will of the House, something that does not happen too often in this Chamber. The will is quite stifled most of the time.

But when this issue is put before the House by the gentleman from Maryland (Mr. Van Hollen) and the gentleman from Michigan (Mr. Kildee), and the House got a chance to look at it, Republicans and Democrats, conservatives from the North, East, South, West, around the country, 414 to 3, they said, get rid of this loophole. It is unjustified, it is unconscionable, it is expensive and it is killing the credibility of this program.

Tonight, we answer that call by the House of Representatives to get rid of this program. But tragically tonight we only answer a part of that call because we do not deal with those provisions in this program that continue these unconscionable profits at the 9.5 percent loans due to the recycling. We are going to stop this loophole for this year, and we ought to stop the recycling.

This is not retroactive. But when you do not stop the recycling, the good purposes for which our colleagues across the aisle are going to put this money to use, and that is to help those teachers, provide loan forgiveness for those teachers in difficult districts who are making the special efforts, some 10,000 additional teachers, who could have access to loan forgiveness, now will not have access to that loan forgiveness.

All it would require is to close the loophole. That is what the House voted on when they voted on the Kildee-Van Hollen amendment. They voted to close a loophole, not sort of close a loophole, not part way close a loophole, but close a loophole. Maybe only for 1 year now, and that is the best we can do under these circumstances, but the entire loophole.

The difference is billions of dollars. The difference is 10,000 teachers in need of loan forgiveness. That is the choice.

I heard this was held up because we had all this power. We would like to use our power now to tell you and persuade you to join with us and close the entire loophole and get those other 10,000 teachers that are eligible. Power to the people, to the Democrats, because apparently that is why you have not done it now for 2 years. So we want to join with you. We can have a manager's amendment tonight to close the loophole like 414 of our colleagues urge.

I want to thank the gentleman from Michigan (Mr. Kildee) and the gentleman from Maryland (Mr. Van Hollen) for their creativity and tenacity in getting this before the House of Representatives, getting it into the full Chamber where the Members on a bipartisan basis have overwhelmingly repudiated this program. I am sorry we cannot go the whole way.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 4 minutes to the gentleman from Michigan (Mr. Kildee), one of the sponsors of the original amendment to get this in front of the House.

Mr. Speaker, I yield 4 minutes to the gentleman from Maryland (Mr. Van Hollen), who again was the spark plug for getting this legislation before the full House and getting this bill to the floor.

Mr. Speaker, how much time do I have remaining?

Mr. Speaker, I yield 2 minutes to the gentlewoman from California (Ms. Woolsey).

Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Davis), a member of the committee

(Mr. DAVIS of Illinois asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield 1 minute to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. Speaker, I yield 3 minutes to the gentleman from New Jersey (Mr. Holt).

Mr. Speaker, could you advise the time remaining?

Mr. Speaker, I yield myself the balance of my time.

Again, Mr. Speaker, we support this legislation. But it is interesting, you know, with the 10-year T-bill rate at 4 percent and the 2-year bill or the 3-year bill at about 1.5 to 2 percent, that a very select group of lenders can get 9.5 percent, the only place in the world you can get a return of 9.5 percent on your money, or the difference between the margin there. It is the only place in the world you can go to get this money, unless you are borrowing from the Mafia.

But what happens with this legislation is, while hiding behind a legitimate claim by nonprofits, they keep open the recycling loophole that is overwhelmingly used, according to the General Accountability Office, by for-profit lenders. Nothing to do with retroactivity, because we stop this practice in the future, and we can stop recycling in the future.

But they have chosen not to do it. They said, if the Democrats had cooperated, they would have done this earlier. Well, we are cooperating, so do it. It is earlier. Do it now. We have this newfound power bestowed upon us by the chairman of the committee. We want it now.

You said you did not do it because we did not cooperate. The more I think about it, it was a brilliant strategy because we did not have to take all that other stuff in your legislation, where these kids were going to lose their rights to low-interest loans and be able to lock in low-interest loans in repayments. We did not have to take all that, which would have punished millions of young people, and we are going to get this loophole closed, too.

Sounds like a brilliant piece of strategy. And here we are at the end of the session with the Republicans implementing, talk about bipartisanship, the Republicans are now implementing this Democratic strategy. It is a wonderful evening to be here at midnight to finally see where the Republicans are saying the Democrats made us do it.

Mr. Speaker, we enthusiastically support this bill. We hope that the Republicans next year will go the full steps to closing the loophole in its entirety.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I thank the gentleman for yielding me this time, and I am pleased that the gentleman from Kentucky has accepted the Sabo motion, but I want to express a caution. It does the country no good, it does this institution no good if that motion is accepted for purposes of moving us to conference and then discarded the moment we move into conference.

I do not want anybody to vote for this motion to accept today unless they intend to oppose any bill that comes back from conference which short-sheets the funding levels described in the Sabo amendment. To do that would be legislative hypocrisy.

Mr. Speaker, I think a number of things need to be pointed out. This President and this administration have a long history of trying to prevent this Congress from providing all of the funding that we think is necessary to protect Homeland Security. After we were hit by anthrax, and our committee on a bipartisan basis put together a list of crucial additions to the Homeland Security budget, we went down to the White House and tried to show them to the President. Before we could say one word, the President said, ``Well, I want you to know that if you appropriate a dollar more than I have asked for for Homeland Security I will veto the bill,'' without even listening to what it was that we had to say. We had to point out to him that there were four different Federal installations that his own security people had said were under grave threat of terrorist attack, which his budget was not doing one blessed thing to protect, and he still resisted us.

So we had to come back to the Congress and, despite the President's threat of veto, we had to add several billion dollars to the bill that year.

The next year, the President pocket vetoed $1.5 billion in additional funding for Homeland Security that this Congress had provided on a bipartisan basis. Ninety-eight percent of the Republicans and the Democrats in both Houses had voted for those add-ons, yet the President declined to allow that money to go forward.

So today we are still far behind where we should be in protecting our courts, far behind where we should be in protecting the northern border. We have 2,000 fewer inspectors on the northern border than the PATRIOT Act itself said we ought to have.

So I am frankly amazed at the footdragging that this administration has done or has engaged in when it comes to providing adequate funding for these items. We have only 13 percent of America's fire departments who are fully equipped to respond to a full-blown HAZMAT incident. We only have one-third of firefighters per shift who are adequately equipped with self-contained breathing apparatuses, and we still have a minuscule percentage of cargo inspected as they come into our ports.

The gentleman from Kentucky talks about how we have 38 ports we are now trying to put the new Customs system in. There are 38 ports we are trying to get that done in, but it is not done yet. And as far as China is concerned, we are barely off the ground at inspecting the huge amount of cargo that comes into this country from China. So we have huge additional holes.

So I hope this House and this committee will not be disingenuous in accepting this amendment now and then walking away from its requirements as soon as we get to conference later today.

What we have been doing consistently is moving bureaucratic boxes around, rather than providing adequate resources to do the job. What we did 2 years ago on Homeland Security, we had 133 agencies that had something to do with homeland security. This Congress took 22 of them, not including the FBI, not including the CIA, the two most important agencies, we took 22 out of 133 agencies, lumped them together, called that the Homeland Security agency. We still had 111 agencies on the outside looking in. They were not included in the reorganization. As a result, we have a huge percentage of key personnel positions in the Homeland Security agency today that are still not filled, and almost 25 percent of the positions that are filled, are filled with political appointees.

Mr. Speaker, what we have not done, while we have rearranged the boxes, is to provide enough adequate financial resources to this agency. So I hope we are serious in accepting this motion today.

Mr. Speaker, will the gentleman yield?

I have attended a lot of briefings that I have never seen you at, with the CIA, the Homeland Security Agency, and a number of others.

You don't know the briefings I have attended.

Get your facts straight.

Mr. Speaker, the gentleman from Kentucky says that he resents the fact that I have raised some of these shortcomings on the House floor. I am sorry he takes so many things personally. We all recognize that his committee has added $800 million to the administration budget; and as far as it goes, that is fine. But that does not mean that we are meeting the needs of this country.

He likes to talk about things that people do not know, ``classified information.'' Rather than hiding behind that classified information, I would simply say I will tell you what is not classified: the fact that we have fewer air marshals today patrolling the skies than the President and the Congress promised in 2001.

I will tell you what is not classified: the fact that the President of the United States himself said that 40 percent of people who are in this country illegally have overstayed their visas, and yet that backlog of cases has grown by 40,000 a year.

I will tell you something else that is not classified: the gentleman says we need to be fiscally responsible. The President in the debate with Mr. Kerry last week said, ``Well, it is interesting to see how much Mr. Kerry wants to provide for homeland security, but where is he going to get the money?''

I will tell you where we tried to get it. We tried to say, instead of giving people who make $1 million a year a $128,000 tax cut next year, let's cut that back for those folks who make over $1 million and put that money into additional port security, put that money into airline security, put that money into screeners. And do you know what? The gentleman from Kentucky voted against that. So he had a choice between homeland security and additional tax cuts for millionaires, and he made the wrong choice.

Mr. President, this bill deserves to pass, but it's only a down-payment on the real reform needed to close a flagrant loophole in the student loan program. The bill takes $285 million in excessive subsidies to banks and gives it to college students and new teachers in the form of increased forgiveness for student loans.

It is only a downpayment, however, because it does not close all of the notorious 9.5 percent student loan loophole, and because even this reform will expire after one year. The bill is silent on the full interest rate gouging that has taken place over the last 18 months-- funds that the Secretary of Education should have reclaimed on his own, and still should after this bill passes.

Obviously, our Republican colleagues hope that this modest action will cool the public outcry that has erupted in the past month as the full extent of this shameful loophole has come to light.

For almost 25 years, the taxpayer has been guaranteeing banks a 9.5 percent rate of return on a specific type of student loans. In 1993, Congress acted to end the guarantee, but a loophole emerged that even the Government Accountability Office says the Bush administration has refused to shut down.

Today's bill still leaves 40 percent of the loophole wide open. In other words, our Republican colleagues can no longer stand the heat from the loophole, and so they're now sacrificing 60 percent of it, in the hope that their special interest friends in the student loan industry can still retain the other 40 percent.

Sadly, under this Republican bill, the abuse will continue. New loans will be

made to new students that taxpayers will subsidize at a 9.5 percent interest rate. It's madness. We should be allowing older borrowers to refinance their student loans at today's market rates, instead of subsidizing big banks at the high interest rates of the 1980s. We should be helping students who are eligible for Pell Grants, instead of subsidizing big banks needlessly.

Republicans claim that some of this subsidy will go to student benefits. I say, it all should go to student benefits in whatever loan program a student participates. No one should be fooled. Half of the student loan loophole that this bill leaves wide open goes to for- profit corporations like Nelnet and Sallie Mae.

The 9.5 percent guarantee is still highway robbery for special interests. Our Republican colleagues reply that at least they're narrowing the highway from five lanes to two lanes. Banks like Nelnet and Sallie Mae can still drive right through, collecting outrageous profits at the expense of students and taxpayers.

I had hoped to offer an amendment to this bill that would close the 9.5 percent loan loophole completely and permanently. But the Republican Majority objects to that effort here and now. We will be back though on the first available vehicle to shut down this wasteful corporate subsidy once and for all.

It's long past time for President Bush and Republicans find the courage to stand up to their special interest friends, and do what's right for the Nation's students and taxpayers.

In most cases, lenders today receive a 3.6 percent rate of return on new student loans. But for the last 11 years, the Government-- taxpayers--have been guaranteeing lenders a 9.5 percent rate of return on a certain group of otherwise non-descript student loans. A 9.5 percent rate of interest might have made sense years ago, but it doesn't today.

In 1993, Congress passed legislation intended to phase-out of existence the 9.5 percent bank guarantee. But two key loopholes have kept that subsidy alive and well. The legislation before the Senate closes one.

The first loophole--the one that isn't closed by this legislation-- allows for what is called 9.5 percent loan ``recycling.'' A lender makes a loan to a student--``Student A.'' Over the course of the next 10 to 25 years, the lender is repaid by Student A and the lender gets a subsidy payment guaranteeing a 9.5 percent rate of return.

Under the 1993 law, after one loan, there should be an end to that 9.5 percent guarantee. But lenders have been recycling Student A payments and the attached Government subsidy into a new loans issued to new students--``Student B''--and claiming a 9.5 percent guarantee on those loans as well. So, 9.5 loans haven't been phased out at all. They've being maintained. And the Department of Education has done nothing about it.

Worse, 18 months ago, lenders started growing the number of 9.5 percent loans through a process called ``transferring.'' A lender shifts a loan out of its tax-exempt bond estate into its taxable bond estate. When the loan shifts, the 9.5 percent guarantee shifts with it and the tax-exempt bond estate then has money available to it to issue new 9.5 percent loans.

As a result of ``transferring,'' 9.5 percent loan bank subsidy payments have more than doubled in the last 18 months. The Bush administration has refused to stop the process, despite Democrats' and GAO's urging.

A year ago, Senate Democrats proposed legislation to shut both loopholes down once and for all. The Senate Republicans did not act on that proposal, did not introduce their own legislation, and did not hold a single hearing. They asked no oversight questions of the Bush administration. In short, they did nothing.

Democrats requested a GAO investigation. We alerted non-partisan higher education policy experts. We requested an SEC investigation. Two months ago, we blew the whistle in the media on the new, explosive growth in the 9.5 loan subsidy. Finally, our Republican friends responded to the criticism with the legislation before us today.

But again, this bill doesn't get the job done. It leaves the ``recycling'' loophole open, and it lasts only one year. Now, this remains a live issue in the Appropriations Committee. I would hope we would follow the House's 413-13 vote lead in shutting down this loophole in its entirety. It's a change past due.