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On behalf of over 700,000 FreedomWorks members nationwide, I urge you to VOTE NO on H.R. 3221—the Student Aid and Fiscal Responsibility Act of 2009 sponsored by Rep. George Miller, D-CA.
Our current system for student loans has serious problems, but the problems of H.R. 3221 are even more severe. By providing an essentially endless line of credit to college attendees, government will massively expand the loan market just as Fannie Mae and Freddie Mac did with housing. We have learned from our recent history that government intervention in credit markets can have disastrous outcomes. Outstanding student loans already total over $577 billion. How high will this number climb when artificially low rates are locked in and cannot respond to market forces?
This bill further increases the amount given out through Pell Grants and adjusts those amounts with inflation plus one percent—meaning a constant, real increase in taxpayer transfers from all workers, including those who didn’t go to college, to those going to college. The Pell Grant essentially sets a floor on the tuition rate that a school will charge. This entitlement will continue to cost taxpayers and over time while drive up the total cost of education. If Congress was really concerned about the long term cost of education, then they would reduce the value of Pell Grants to put downward pressure on prices rather than funneling more money to universities.
The bill will make government the direct lender to students. The supporting rhetoric claims that it will make education finance immune to market forces—but that is reason to oppose the bill. Market forces drive costs down. We all want everyone to be educated, informed, and knowledgeable, but ignoring the economic law of supply and demand does not make it go away. Providing a virtually unlimited number of loans at artificially low rates will bid the price of education higher. Rather than working to actually drive down the cost of education, H.R. 3221 just hands out more money to pay the higher prices—which in turn drives the prices even higher.
For these reasons I, on behalf of 700,000 FreedomWorks members, urge you to VOTE NO on H.R. 3221. We will count your vote on H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009, as a KEY VOTE when calculating the FreedomWorks Economic Scorecard for 2009. The FreedomWorks Economic Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.
President and CEO