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Dems plan to cut rates on college loans

Incoming House Education and Workforce Committee Chairman, Rep. George Miller, D-Calif., gestures during a news conference on Capitol Hill in Washington, Tuesday, Dec. 12, 2006. (AP Photo/Dennis Cook)

WASHINGTON --Democrats say they are putting education reform at the top of their to-do list as they prepare to take control of Congress.

However, they have not spelled out what the math will look like.

Democrats say they will use their new authority in the House and Senate to slash interest rates on need-based college loans in half -- from 6.8 percent to 3.4 percent.

"That will be done almost immediately, certainly within the first couple of weeks of the new session," California Democratic Rep. George Miller, the incoming chairman of the House education committee, said in an interview.

At a news conference Tuesday, Miller said anew that making it easier for low-income and middle-class families to pay for college will be a priority. He declined, however, to say how lawmakers would pay for their initiatives, which may run head-on into another pledge: to require any new spending to be offset with cuts elsewhere or new taxes to avoid increasing the deficit.

Miller said Democrats would stick with announced plans to boost Pell grants, which do not have to be paid back and go to low-income students. Party leaders have said they want to raise the maximum Pell award from $4,050 to $5,100. That would cost roughly $4 billion a year, prompting some to press for a go-slow approach.

"I think it's clearly going to have to be over a period of a couple of years," Miller said.

Miller and Massachusetts Sen. Edward M. Kennedy, the new chairman of the Senate education committee, say the government can save money by steering college students toward getting direct loans from the government instead of borrowing from banks that in turn get federal subsidies. They point to government studies showing direct lending to be cheaper for the government.

"We'll raise the Pell grant and lower loan payments by ending corporate welfare for big lenders of college loans," Kennedy said in a statement.

That idea will likely face resistance from Republicans who say it's important to keep the banks in the subsidized college loan business.

"I'll be as blunt as possible: You will never convince me -- never -- that the federal bureaucracy can do a better job than the private sector in managing the student loan program," Republican Rep. Howard "Buck" McKeon, the outgoing chairman of the House education committee, said in a recent speech to bankers.

Money also is a sticking point in the debate over the No Child Left Behind law, passed in 2001 and now up for renewal.

Democrats have promised hearings, and Miller said Tuesday that renewing the law was a high priority.

The law requires schools that get federal poverty aid and fall short of annual progress goals to take steps to boost student achievement. Schools in need of improvement must provide tutoring, offer public school choice to students or initiate other reforms such as overhauling their staffs.

Kennedy and Miller joined President Bush to push for the law's passage, and they still support it. However, they say Republicans haven't spent the money needed. They say the administration has provided about $50 billion less than Congress called for.

Miller said there were several aspects of the law he wanted to revisit but added, "Of course, the granddaddy of them all is funding."

Republicans say it's common for legislation to be funded at less than the full level Congress authorizes.

Michigan Democratic Rep. Dale Kildee, who is likely to lead the subcommittee that oversees the No Child Left Behind law, said the federal government has an obligation to boost funding.

"We have mandated to these local districts to achieve or face restructuring," Kildee said. "The schools that have the greatest problems have the fewest resources."

Education Secretary Margaret Spellings, who recently discussed the law with Miller and Kennedy, said she was optimistic leaders in both parties will ensure the law is renewed for another five years.

Besides money, a point of contention between some of the law's critics and its supporters is an unprecedented requirement that all students be proficient in reading and math by 2013-14, a goal critics say is unrealistic. Spellings says the date should not be moved.

"Politically it's very difficult," said Michael Rebell, an expert in the law at Columbia University's Teachers College. "Nobody wants to be the one to say that I'm going to leave any children behind."

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