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You've heard the one about the "federal government takeover" of health care, but how about the feds taking over education?
U.S. Rep. Allen West, a Republican from South Florida who took office Jan. 5, 2011, has a beef with government takeovers.
On Fox News Jan. 2, West said (around page 3 of the transcript): "When you look at the things that happen in our country and the nationalization of so much of our production -- being it an automobile industry, being it a health care industry, being the fact that we had an amendment in the health care law that said the federal government is going to take over education."
A day later, this time on CNN, he again spoke critically about health care legislation connected to a change in education loans. In response to a question by host John King related to jobs and health care, West said:
"But this health care law is tied to jobs because when you look at the 52-employee rule, a lot of people are not going to have more than 52 employees because of the threat of the high cost. And we also see that insurance premiums are already going up for Americans. Look, you know if we're talking about improving health care, that does not mean 11 new taxes. That does not mean 159 new government agencies or bureaucracies. It does not mean 16,000 new IRS agents.
"And I'm waiting for someone to explain to me what does government control of college education loans have to do with health care, which was part of that law. So there are some things that we need to carefully examine and we need to come up with a right, free market, free enterprise-based solution that looks at the cost analysis of health care and not just a simple government expansion."
For this Truth-O-Meter we wanted to know what West was referring to about "an amendment in the health care law that said the federal government is going to take over education." And is he right about a takeover?
"Takeover" is a hot-button word
But first, some background from PolitiFact about that other big alleged "government takeover:"
PolitiFact editors and reporters -- as well as readers -- chose "government takeover of health care" as the Lie of the Year for 2010. According to a PolitiFact article published Dec. 16, 2010, "a 'Government Takeover' conjures a European approach where the government owns the hospitals and the doctors are public employees. But the law Congress passed, parts of which have already gone into effect, relies largely on the free market."
Employers will still provide insurance through private companies, the government did not nationalize doctors or seize hospitals, and ultimately there was no public option -- a proposed government-run plan.
With that reminder of the health care takeover myth, let's return to West's claim about the federal government taking over education.
On Jan. 6, we contacted West spokeswoman Angela Sachitano and asked her to explain what amendment West was referring to and how it constituted an education takeover.
Health care link to student loans
We also did some research to look for a connection between government control of college education loans and the 2010 health care bill. We found some background from updates posted March 6, 2009, and April 5, 2010, on the Obameter, PolitiFact's website tracking promises made by President Barack Obama. The promise Obama had made was to "eliminate wasteful subsidies to private student lenders, which will save nearly $6 billion dollars per year, and invest the savings in additional student aid."
The Obameter wrote in 2009:
"There are basically two kinds of college loan programs: the Federal Family Education Loan Program, in which private lenders make and secure loans to students and receive subsidies from the federal government, and the William D. Ford Direct Loan Program, in which the federal government directly loans to students. Obama's plan is to shift student lending away from the private loans to the government's direct loan program, which he believes is more efficient and cost-effective."
On April 5, 2010, the Obameter wrote: "Congress ultimately decided against cutting the program through the 2010 budget bill, but it was more forthcoming the second time around. On March 30, 2010, Obama signed legislation -- which was part of the health care bill -- that replaces the private lending program with 100 percent direct lending, effective July 1, 2010."
In addition to the two updates on the Obameter, PolitiFact's Truth-O-Meter on April 21, 2010, summarized the cost savings of the change in the student loans:
"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."
The Health Care and Education Reconciliation Act of 2010, which Obama signed into law March 30, 2010, included a portion on "Student Loan Reform" -- read the Congressional Research Service Summary to learn more about that portion of the bill.
On Jan. 7, Sachitano sent us a copy of a March 21, 2010, New York Times article about the House voting to revamp the student loan program as part of the reconciliation bill that included the health care law. Nothing in the article suggests that the move was a federal government "takeover" of education. The article did state that: "Private banks lobbied against the student loan changes, which eliminate a long-flowing source of revenue for them."
Higher ed experts weigh in
We spoke with three experts on higher education and all concluded that the changes in the loan program did not constitute the federal government taking over education. We spoke to Terry Hartle, vice president of the division of government and public affairs at the American Council on Education; Barry Toiv, vice president for public affairs at the Association of American Universities; and Stephanie Brown, associate vice president for enrollment and student services at Nova Southeastern University in Broward County. Part of West's Congressional District 22 lies in Broward.
Hartle gave us more history of the federal student loan program. When that program started in 1965, banks provided student loans that were guaranteed by the federal government. In 1993, then-President Bill Clinton said it didn't make sense for the government to subsidize banks to make loans to students and it would be better for the government to make loans directly to students. Congress didn't want to do away with the loan program involving private banks but did agree to add a direct federal loan program. Two programs co-existed for many years -- until the reconciliation act in 2010.
"Very few students will notice any difference in their loans because of the change," Hartle said. "They are filling out the same loan application -- it just goes to a different post office box. The loan -- once it is made -- is not held by SunTrust, CitiBank or Bank of America; the loan is held by the U.S. Department of Education. The Department of Education will hire contractors who might be Bank of America, CitiBank or SuntTrust to manage the portfolio of loans. It's much cheaper for the Department of Education to make student loans this way than to make it through the banks."
Colleges will notice some differences -- the financial aid employees are now dealing with the federal Department of Education rather than several banks.
"From campus officials I've talked to, it's not that big a difference," Hartle said. "The vast majority of college presidents I talk to said it makes no difference to them, they didn't incur significantly higher costs ... and frankly the implementation was remarkably smooth."
Said Toiv, of AAU and a former deputy press secretary under President Clinton, in an interview Jan. 7:
The change to the loan programs "didn't take banks out of the program completely because the private sector still administers the loans for the Department of Education. However it did take out the part of the program where banks were the actual lenders. Opponents of this did refer to it as a federal 'takeover' of student lending. The proponents did not refer to it that way mainly because it's always been a federal program."
While this changed work responsibilities for some employees in financial aid offices at universities, "This has no impact at all on the management of colleges and universities," Toiv said.
Brown, at Nova, agreed in a Jan. 7 interview, saying it's not a takeover and the process is actually simpler for students who don't have to research multiple lenders anymore.
We sent Sachitano an e-mail Jan. 7 to tell her that our experts did not describe this as a government takeover and to ask whether she had additional proof to back up West's claim. She replied: "No, we're good."
Has the government seized control of education?
West said: "We had an amendment in the health care law that said the federal government is going to take over education." This is the same type of overblown "takeover" rhetoric that led to our 2010 Lie of the Year award. The federal government was a major player in student loans for years before Obama signed the health care law. And the law does not mean that colleges and universities are now under the control or management of the federal government. We rate this claim False.
Fox News, Transcript, Jan. 2, 2011
CNN, Transcript, Jan. 3, 2011
New York Times, "Student loan bill poised to pass in health vote," March 21, 2010
PolitiFact, Lie of the Year, Dec. 16, 2010
PolitiFact, "The Obameter: Reducing subsidies to private student lenders and protect student borrowers," March 6, 2009 and April 5, 2010
PolitiFact, "Texas organizer for Democratic group says student lending law is largest-ever investment in higher education," April 21, 2010
U.S. Library of Congress, Health Care and Education Reconciliation Act of 2010, March 30, 2010
Interview, American Council on Education vice president of the division of government and public affairs Terry Hartle, Jan. 6, 2011
Interview, Association of American Universities vice president for public affairs Barry Toiv, Jan. 7, 2011
Interview, Nova Southeastern University associate vice president of enrollment and student services Stephanie Brown, Jan. 7, 2011
Interview, U.S. Rep. Allen West spokeswoman Angela Sachitano, Jan. 6-7, 2011
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