Statement of Delegate Comstock on Student Loan Legislation

McLean, VA – Today, Governor McDonnell released a statement I wanted to share with you regarding the recent, but largely unnoticed, takeover of the Federal Student Loan program. As the Governor details, this takeover was incorporated into the recent health care bill and will hit Northern Virginia particularly hard through jobs losses at Sallie Mae as well as fewer loan choices for our many college bound students. In these tough economic times, these are the kind of decisions that deserved at least some minimal discussion before dramatic changes were made on a solely partisan basis. Unfortunately, that did not occur and our families and students will bear yet another unexpected burden.

Commonwealth of Virginia
Office of Governor Bob McDonnell

Statement of Governor Bob McDonnell on Federal Student Loan Legislation

“When the President signed the Health Care Reconciliation Bill into law this week he also simultaneously expanded the reach of the federal government deeper into yet another major industry: student loans. Included in the health care bill is an unrelated policy measure that places all of Virginia’s colleges and universities and students into a federally-administered student loan delivery system. This provision was never debated. Virginia parents, students and college administrators never received an opportunity to appropriately comment on a sweeping new policy that will have an immediate impact on the citizens of Virginia and our economy.

Student loan provider Sallie Mae, a private originator of student loans, is based in Reston, Virginia. The Wall Street Journal reports that the signing of this onerous legislation will force the prompt layoffs of 2,500 of their 8,600 employees. This will mean significant job losses in Virginia where we already have a 7.2% unemployment rate. The effect of the job losses will not just be felt by those who suffer them, but will ripple throughout our economy.

The federal takeover of the student loan delivery system will take away yet more choices from American parents and students. Now the federal government will have monopoly control of the entire industry. Virginia colleges and universities must now move to the mandated federally-administered system, taking choice away from our institutions of higher learning as to which system of student loan delivery works best for their purposes. Virginia colleges and universities will have just four months to move from the current system to the federally-administered one. This will all occur while incoming college freshman are in the middle of applying for loans to pay for their higher education. It will greatly complicate matters for students and parents across the Commonwealth during an already stressful and difficult period.

The expansion of the federal government into the private sector is now occurring at an alarming pace. From the auto industry to healthcare to student loans, Washington continues to grow bigger, while the choices available to American citizens in the free market grow fewer. The legislation signed this week places the student-loan delivery system entirely in the hands of the federal government, providing fewer funding options for students and parents, forcing colleges and universities to adhere to a one-size fits all federal system in a matter of months, and again increasing the power of the federal government. It will cost a number of Virginians their jobs. And it all occurred with little to no public conversation or input by burying the provisions in a health care bill. I urge Virginia’s federal representatives to seek all possible means by which this policy can be reformed.”

http://www.governor.virginia.gov/news/viewRelease.cfm?id=102