President got it wrong on budget cuts for school loans

Thursday, January 26, 2006 at 07:57 AM

On Monday, the President spoke at Kansas State University, and, unlike in most of his public appearances, he actually let people in the audience ask questions.  The White House is, as usual, sufficiently proud of its chief occupant that it put a transcripts of the event on its web site.

You can read through the questions yourself and see that vast majority were of the extremely "soft" type that makes one (me) wonder if they came from people planted in the audience.

Mr. Bush did get one kind of touchy question from the audience on how the government was helping students' futures by cutting the student loan program by $12.7 billion.  Unfortunately, it looks like he got his answer wrong.

Here's the full exchange:

Q Hi, I just want to get your comments about education. Recently, $12.7 billion was cut from education, and I was just wondering how that's supposed to help our futures? (Applause.)

THE PRESIDENT: Education budget was cut -- say it again. What was cut?

Q Twelve point seven billion dollars was cut from education, and I was just wondering how is that supposed to help our --

THE PRESIDENT: At the federal level?

Q Yes.

THE PRESIDENT: I don't think that -- I don't think we've actually -- for higher education? Student loans?

Q Yes, student loans.

THE PRESIDENT: Actually, I think what we did was reform the student loan program. We're not cutting money out of it. In other words, people aren't going to be cut off the program. We're just making sure it works better. Part of the reconciliation package, I think she's talking about. Yes, it's a reform of the program to make sure it functions better. It is -- in other words, we're not taking people off student loans, we're saving money in the student loan program because it's inefficient. And so I think the thing to look at is whether or not there will be fewer people getting student loans. I don't think so. And, secondly, on Pell grants, we're actually expanding the number of Pell grants through our budget.

But, great question. I think that the key on education is to make sure that we stay focused on how do we stay competitive into the 21st century. And I plan on doing some talking about math and science and engineering programs, so that people who graduate out of college will have the skills necessary to compete in this competitive world.

But I'm -- I think I'm right on this. I'll check when I get back to Washington. But thank you for your question. (Applause.)

Well, here's a little insight on what the budget reconciliation legislation does to student loans, from The Duke University Chronicle, published about 10 days before the President's Kansas speech:

"As one of its first legislative acts of the new year, Congress passed a resolution to slow the growth of federal spending. It aims to do so in part through the reconciliation bill, which will cut government-backed student-loan programs by $12.7 billion. At the same time, however, new student grant programs will be created."
"'Students will pay a slightly higher level of interest [to lenders], but I don't see that as putting additional pressure on the University,' Director of Financial Aid Jim Belvin said. 'I'm not sounding an alarm.'"

"The federal loan cut makes up a third of the total spending-reduction plan, the goal of which is to decrease national deficits by $40 billion.

"Though $21 billion was initially cut from the loan programs, $8 billion was then designated to be reinvested in financial aid."
[End Excerpt]

So what happened was they cut about $21 billion from student loans, then transferred about $8 billion of that to other student aid programs, leaving a cut of....$12.7 billion.

Of course, Bush can always hang his hat on his qualification that "I think the thing to look at is whether or not there will be fewer people getting student loans. I don't think so."

That may be true, although it will undoubtedly cost them more to get and to pay back the loans.  But that really doesn't answer what the person in the audience asked:

"Recently, $12.7 billion was cut from education, and I was just wondering how that's supposed to help our futures?"

As the president said, it is a good question.  He didn't answer it.  Let's hope the President took the name of the student who asked the question, so he can correct his answer after he looks it up back in Washington.

If he has time, maybe he can also address why the Senate-House Republican confrerees managed to restore funding that will save an estimated $22 billion for the pharmaceutical industry over the next several years (see the post "Republicans use one-party rule to parcel out the billions").