After passing by a wide margin in the U.S. House of Representatives, the Student Aid and Fiscal Responsibility Act, SAFRA, is under discussion in the Senate, and some Arizona congressmen are concerned about the costs the legislation may incur.
The bill would adjust the current Federal Family Education Loan program, which subsidizes banks to distribute federal student loans. If passed, SAFRA would replace the program by lending to students directly from the government.
Advocates for SAFRA cite a Congressional Budget Office report released last month that said the measure would save the government $87 billion through 2019. The report, however, also counts a $13 billion increase in discretionary spending and $7 billion in costs to administer the loans, resulting in net savings of about $67 billion.
Three of Arizona’s legislators in the House of Representatives — Reps. Jeff Flake, Trent Franks and John Shadegg —voted against the bill and expressed doubt over the accuracy of the report.
“There are a lot of different interpretations of [SAFRA’s cost] out there,” Flake spokesman Matthew Specht said.
The estimates from the Congressional Budget Office use figures that don’t take into account the risk of investing public money into student loans, he said.
There is always a risk of students being unable to pay back their loans, he said, and that will cost the government additional money.
“Unfortunately, [SAFRA’s] proponents have focused on the low end, and not taken into account the risk-based formulas that expose taxpayers to several billions of dollars of debt,” Specht said.
Flake was also opposed to the bill’s provision of funding to K-12 school construction, which he said should have been covered by the federal stimulus. Flake voted in favor of several amendments that would have eliminated these provisions, but none were passed.
Those provisions also have economics and math senior Jeff Semmens doubting the wisdom of passing the legislation. He said the long-term costs of the legislation haven’t been determined and could lead to higher taxes in the long run.
“It’s hard to calculate, but government spending usually has a negative [economic] impact because of the opportunities people lose in having to pay [higher] taxes,” he said.
The measure passed the House by a margin of 253 votes to 171, with most members voting along party lines, including the five Democrats representing Arizona.
The Senate is scheduled to vote on the bill Oct. 15.
Representatives of Sen. John McCain’s office said he hasn’t yet made a decision on the bill, but is wary of the cost of implementing and administering the new loan program.
“Sen. McCain applauds any effort to make college more affordable and accessible to all students,” spokeswoman Brooke Buchanan said in an e-mail. “However, McCain remains concerned over the uncertainty surrounding the funding for [SAFRA].”
Sen. Jon Kyl’s office could not be reached for comment.
The Arizona Students’ Association is continuing its push to help pass the bill this week with “Raising Pell Week” events, including a campaign to urge students to call and e-mail their senators.
ASA spokeswoman Christina Rocks said the cost of administering the loans and running the program is “negligible,” and will be offset by the elimination of bank subsidies.
“I don’t think that will lead to a lot of costs by taxpayers,” Rocks said. “[SAFRA] actually reduces and simplifies the loan process, which in the end would actually make it less expensive.”
Reach the reporter at derek.quizon@asu.edu.
