Negotiators in the House and Senate plan to meet formally next week to work on a final agreement on a joint budget resolution for fiscal year 2008. Even if a Budget Resolution Conference Report is not approved next week, the Appropriation Committee and the House, under congressional budget rules, can begin considering appropriation bills on or after May 15th.

Negotiators continue to debate if a budget reconciliation instruction should be included in the joint budget resolution. The House's version of the budget resolution includes the reconciliation instruction requiring the Education and Labor Committee to create $75 million in savings over five years. This reconciliation instruction was not included in the Senate's version of the budget resolution for tactical political reasons. The reconciliation instructions would allow lawmakers to cut subsidies to student loan companies in order to increase student aid spending, as long as there is a net savings of $75 million. House Education and Labor Committee Chairman George Miller (D-CA) is pushing for the reconciliation instructions to be included in the joint resolution.

Such a reconciliation bill would come up with the $75 million in five-year savings, but it would also be used as a vehicle to advance other priorities serving students and to pay for them. A reconciliation bill would allow the authorizing committee to cut billions of dollars from the FFEL Program subsidies to banks and/or guaranty agencies to pay for other enhancements to the student aid programs such as, for example, (and these are only examples - we are not saying this will happen) to increase loan limits, increase in the Pell Grant maximum award, or implement whatever student aid grant program or loan program benefits a majority of the authorizing committee might want.

Fundamentally, the ability to use a reconciliation bill gives the authorizing committees enormous advantages. They can place their entire Higher Education Act reauthorization bill on a fast track using the reconciliation process. Reconciliation means floor debate is limited; amendments must be deficit-neutral. That means, for example, if they do not like a specific cut to a lender subsidy, they can't just strike it by getting a majority vote as they can in a normal authorization debate; they need to find other cuts in the loan programs (offsets) or get 60 votes to waive this paygo rule, which is very hard to do. No filibusters are allowed in the Senate; and there are other important parliamentary considerations.

But, there are legislative hurtles to overcome before Chairman Miller's plan is realized. The House Chairman faces opposition from Senate Budget Committee Chairman Kent Conrad (D-ND). Conrad has indicated that he supports increasing spending on student aid, but does not want to use reconciliation instructions to accomplish this goal.

"[Reconciliation instruction] was intended for deficit reduction, not for tax cuts, not for spending programs, not for special treatment, however meritorious the subject matter is. The only reason it can be used in reconciliation is because they've put forward $75 million of savings..." Conrad told Congress Daily. "I criticized Republicans when they used reconciliation for tax cuts, a purpose for which it was never intended. I can't very well turn on a dime now and say 'Oh, but it's OK to use it to pass a spending program."

News reports have other influential Democratic Senators supporting Conrad's position in opposition to using reconciliation instructions to increase spending on other Title IV programs using as an offset reductions in lender subsidies.

By Haley Chitty
NASFAA Assistant Director for Communications

By Larry Zaglaniczny
NASFAA Director for Congressional Relations

Posted 05/04/07 to www.NASFAA.org. Please submit Web Site questions or comments to Web@NASFAA.org