This was a vote on final passage of H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009. The bill made a major change in the federal student loan program. It provided that all new federal student loans be originated directly by the federal government rather than by private lenders issuing federally-guaranteed loans. The legislation was designed, in part, to hold down the interest rate on federal education loans, and to make it easier for families to apply for college financial aid. The non-partisan Congressional Budget Office had estimated that shifting new educational lending from a guaranteed third party loan program to a direct loan program would result in budgetary savings.

H.R. 3221, among other things, also significantly increased federal scholarship and grant program and funding for historically black colleges and community colleges. In addition, it included provisions to help veterans attend college under the GI Bill and to give loan forgiveness to members of the military who are called up to duty in the middle of an academic year.

Rep. Hinojosa (D-TX), one of the leading supporters of H.R. 3221, said America’s “competitiveness and innovation in the world depends on our ability to invest in human capital and train a workforce for the 21st century”, and that the bill was designed to help reach the goal of having the U.S. “produce the most college graduates in the world by 2020 and makes our workforce strong and competitive.”

Referring to the provisions changing the student loan program, Hinojosa said the bill “provides low-income and middle class families with reliable, affordable, high-quality direct Federal student loans, and simplifies the application process for financial aid.” He also claimed that the legislation is “fiscally responsible and helps reduce the deficit. It . . . directs $8 billion in savings back to the U.S. Treasury to help pay down the deficit.”

Rep. Kline (R-MN) opposed the bill and argued that the move to a student loan program that only allows for direct federal loans is a “government takeover.” He noted that students already had an option of direct federal loans or federally-guaranteed loans issued by private lenders. Kline argued that the change will put into place “a one-size-fits-all federal loan model that requires the U.S. Treasury to directly lend tens of billions of dollars each year--tens of billions of dollars we don't have, and will be forced to borrow.” Kline argued that the best method would be a “competition” between direct federal lending and federally-guaranteed loans by private lenders and “the best program ought to win in the marketplace.”

Kline also opposed the bill because, he said, it “is awash with new entitlement programs, including a new early childhood program to develop and fund programs at the state level. He claimed that the bill “will cost closer to $15 billion over the next 10 years--and when market risk is factored in, the cost spikes to nearly $50 billion more.”

The vote was 253-171. Two hundred and forty-seven Democrats and six Republicans voted “aye”. One hundred and sixty- seven Republicans and four Democrats voted “nay”. As a result, the House passed and sent on to the Senate legislation providing that all new federal student loans be originated directly by the federal government, and authorizing and extending several major education and school construction programs.