Fiscally responsible reforms for students, workers and retirees.
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MYTH vs. FACT: The Democrat Entitlement Bill
Democrats tout the College Cost Reduction Act (H.R. 2669) as a historic investment in student aid programs, but under the microscope, it’s clear that these claims fall flat. In reality, this legislation would create nine new entitlement programs, while placing the interests of graduates, colleges, and universities above the needs of low-income students. The following facts expose some of the most common myths propagated by those who aim to mislead students and parents about this Trojan Horse legislation.
MYTH: The Democrat entitlement bill represents the single largest investment in student aid since the GI Bill.
FACT: Out of $18-plus billion in new spending under the bill, House Democrats only manage to direct about one-third to Pell Grants, the most successful student aid program on the books. Instead, the Democrat bill cuts interest rates for those who already have graduated from college, at a cost of $6.2 billion to U.S. taxpayers. This means the Democrat “student aid” bill’s largest amount of new spending, ironically, wouldn’t impact a single college student.
Moreover, the Democrat entitlement bill represents a significant change in the way federal entitlement dollars are spent. Historically, the federal government reserves entitlement spending for individuals, such as Social Security recipients, Medicare enrollees, and students. The Democrat bill shifts the focus of entitlement spending away from individuals to colleges, universities, and private organizations. Once the government starts down this path, it will be difficult to stop the spending in other areas.
MYTH: The Democrat entitlement bill will establish new programs at no new cost to taxpayers.
FACT: The bill is nothing more than a Trojan Horse for new spending at the long-term expense of American taxpayers. The measure has been considered under the expedited procedure of budget reconciliation, which protects it from a potential filibuster in the Senate. Even though reconciliation is intended for deficit reduction, this bill simply exploits the procedure. It cuts roughly $18.58 billion over five years in payments to student loan providers, but simultaneously spends more than $17.13 billion during that same time period on multiple programs, including nine new entitlement programs – an apparent net savings of less than 9 percent.
However, once these new entitlement programs are created, history has proven that they will never die. The long-term costs of these new programs will be substantial. And other proposals included in the bill, such as the interest rate cut for college graduates, will have exploding long-term costs that could amount to over $32 billion after an initial phase-down over the next five years. If these proposals continue in the future, taxpayers will be forced to pay billions more to cover this new spending.
MYTH: The Democrat entitlement bill balances fiscal responsibility with the goal of expanding college access.
FACT: The bill increases aid to college graduates, as well as colleges and universities, at the expense of students who receive Pell Grants. To begin, the legislation would cut student loan interest rates at a potential long-term expense of $32 billion after an initial five-year phase-down. On top of that, the measure would place billions of federal dollars on spending auto-pilot over the next five years by triggering an onslaught of new entitlement spending including:
With billions in new programs – most of which is misdirected toward institutions and graduates rather than students – this bill marks the first step toward an explosion in new, unchecked entitlement spending and another unfortunate step toward further hyperinflation in college costs.