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By W. Gardner Selby April 21, 2010

Texas organizer for Democratic group says student-lending law is largest-ever investment in higher education

A Texas-based Democratic activist hailed recent congressional action on student loans by laying claim to history.

Luke Hayes, Texas state director of Organizing for America, which is part of the Democratic National Committee, said in an April 7 press release: "The Health Care and Education Reconciliation Act is the largest-ever investment in higher education..."

Ever? We endeavored to learn more.

Ricardo Ramirez, a DNC spokesman, said Hayes' statement was based on a Web page kept by the House Committee on Education & Labor, chaired by U.S. Rep. George Miller, D-California. A sentence on the page when we visited said the adopted Student Aid and Fiscal Responsibility Act makes the "single largest investment in higher education ever."

Miller spokeswoman Rachel Racusen told us that the law frees up close to $40 billion over the next 10 years by ending government subsidies to student lenders. The money is to be spent on bolstering the Pell grant program, which serves needy college students, and funding other college grants.

The non-partisan Congressional Budget Office, which analyzes the fiscal impact of legislation, has said the student-lending changes will save the government nearly $61 billion in the 10-year period. The office estimates that of those savings, $36 billion will go to Pell grants, $2.2 billion to assist colleges historically serving blacks or other minorities and $750 million to other college-access grants.

Racusen said another $7 billion will go to higher education thanks to health-care related changes in law, putting the historic total investment headed to higher education at more than $45 billion over the 10 years.

That's not chicken feed, but we wondered how the roughly $4.5 billion per year compares to past investments in higher education such as the GI bill, which started funding college for veterans after World War II, or the flurry of scholarship grants and loans launched in the 1960’s. Over two days, we were unable to come up with total expenditures for those developments, but experts on higher education agreed that spending on those efforts has been substantial.

Donald Heller, director of the Center for the Study of Higher Education at Penn State University, advised us of at least two flaws in the "largest-ever" claim posted by the House committee: the projected spending will be spread over 10 years, and the annual total will run short of what the federal government already delivers to higher education.

One example: Pell grants for this year alone will account for more than $30 billion in spending, according to Jason DeLisle, director of the Federal Education Budget Project for the Education Policy Program for the New America Foundation, a non-partisan public policy institute.

Heller suggested we check research by the authoritative Chronicle of Higher Education. In 2008, the Chronicle said federal spending on research at U.S. colleges and universities exceeded $25 billion during fiscal 2006. Multiply that by 10, representing a decade, and the ballpark federal spending on research at colleges and universities is $250 billion.

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Racusen, Rep. Miller’s spokeswoman, conceded there may have been larger expenditures in higher education over the years—such as that $250 billion in federal research aid. However, she said, it’s not appropriate to compare research dollars to direct spending on students.

Racusen said in an e-mail: "There is a significant difference between research funding, which may be sent to a university but is not considered supporting higher education because it is not used to help students pay for college, or other purposes that involve a students' quality of education at a particular university (such as improve dorms, fund campus services, etc.), and investments in higher education, which are intended to help support the student side of higher education."

Also, Racusen said, discretionary spending—which requires annual action by Congress—doesn't have the oomph, or stability, of the student-loan law, which remains in place unless a future Congress changes course.

Terry Hartle, senior vice president of the Washington-based American Council on Education, offered his take: "This is the single-biggest concrete investment in Pell grants that we’ve ever had … Is it absolutely positively the highest investment in higher education we’ve ever had? I’m not sure that’s the case. But this is a certifiably big deal."

Hartle later shared figures reflecting several such large funding streams. For instance, some $650 billion in college loans are currently in "repayment" by students and their families, evidence of a mammoth commitment to higher education.

Hartle said a revision of veterans' benefits after the attacks of Sept. 11, 2001 promised more spending on higher education -- $60 billion in benefits over 10 years -- than the latest action on student lending, though individual veterans still would have to request the approved assistance.

And, Hartle said, a 2007 college-cost reduction act was estimated to have a $32 billion value over 10 years. All in all, he said, "an enormous amount of money has been made available to help low and middle class families over just (the last) four years."

Hartle said it'd be correct to say the lending-law change is "damn close" to the largest-ever investment in college student aid.

DeLisle suggested the new law's significance lies less in the amount of money generated for higher education than in the fact that powerful lending interests were overcome to make it happen. "Congress was able to shut out one of the biggest and most effective lobbying machines that has ever been around Washington," he said.

Adding everything up: Hayes' claim would have been close to spot-on if he'd limited the "largest-ever investment" descriptive to "one-time decisions by Congress boosting grants to needy college students," admittedly a not-so-pithy mouthful.

We're not the only ones to divine this difference. As we finalized this article, the House committee rewrote its online statement to state that the law is the "single largest investment in federal student aid ever."

Racusen told us: "Given your feedback, we wanted to make sure we were as clear as possible."

We rate Hayes' statement as Barely True.

Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.

Our Sources

The Chronicle of Higher Education, federal funds for college- and university-based research, fiscal 2006, August 29, 2008 accessed April 15, 2010

Congressional Budget Office, "Estimate of Title II, Subtitle A in an Amendment in the Nature of a Substitute to H.R. 4872 as Reported," March 18, 2010

E-mail and interviews, Rachel Racusen, communications director, Democratic side, U.S. House Committee on Education & Labor, April 15 and 16, 2010

E-mail, Rachel Racusen, April 19, 2010

Interview, Jason DeLisle, director of the Federal Education Budget Project for the Education Policy Program for the New America Foundation, April 16, 2010

Interview and e-mail, Terry Hartle, senior vice president, American Council on Education, April 16 and 20, 2010

Interviews, Donald E. Heller, director, Center for the Study of Higher Education, The Penn State University, April 15 and 16, 2010

Interview, Ricardo A. Ramirez, regional press secretary, Democratic National Committee, April 15, 2010

Interview and e-mail, D. Bruce Johnstone, director, International Comparative Higher Education Finance and Accessibility Project, Graduate School of Education, University at Buffalo, State University of New York, April 15, 2010

U.S. House Committee on Education & Labor, Rep. George Miller, chairman, "Student Loan Reform: What’s In It For You," accessed April 15, 2010

U.S. House Committee on Education & Labor, Rep. George Miller, chairman, "Student Aid and Fiscal Reponsibility Act (updated 3.18.2010," accessed April 14, 2010 (site's language was subsequently revised)

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Texas organizer for Democratic group says student-lending law is largest-ever investment in higher education

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