Colorado & Denver News

by Raj Chohan
DENVER (CBS4) ― Reality Check is the name of a new set of special reports by CBS4 reporter Raj Chohan.

In the Aug. 31 Reality Check, Chohan analyzed the newest "Both Ways Bob" attack ad against Bob Beauprez. His complete notes on the report lie below.

Reporter notes and sources:

The third "Both Ways Bob" ad from Citizens for Progress attacks Bob Beauprez for his vote on the Deficit Reduction Act of 2005. In particular, the commercial attacks the provisions concerning higher education.

AD STARTS:

IN COLORADO, BOB BEAUPREZ SAYS HE'S FOR EDUCATION. BUT IN WASHINGTON, CONGRESSMAN BEAUPREZ VOTED TO CUT STUDENT AID, MAKING IT MORE DIFFICULT FOR MIDDLE CLASS COLORADANS TO SEND THEIR CHILDREN TO COLLEGE. NO WONDER THEY CALL HIM, BOTH WAYS BOB.

Commentary

The ad refers to S.1932, The Deficit Reduction Act of 2005. Inside this $39 billion dollar budget savings measure is $12 billion dollars of cuts in the growth of spending on higher education. Much of the savings comes from changes to the Federal Student Loan program.

According to Congressional Budget Office: "the largest budgetary effects of s. 1932 over the next five years would stem from changes in federal Student Loan Programs. Those changes include both decreases and increases in education spending, and, on balance, would account for 11.9 billion of the estimated net savings through 2010." (source: Congressional Budget Office report on S.1932)

Read more information on the CBO report.

The particular changes that impact students include the reduction of subsidies to lenders, and the implementation of the scheduled interest rate changes in the Stafford and Plus loan programs, among others.

"S.1932 would set a fixed rate interest rate (6.8%) for student loan repayment and consolidation, and fix rates on parent loan repayment at (8.5%). While it contained some provisions supported by universities, the overall bill was generally opposed by the higher ed community." (source: California State University: Committee on Governmental Relations, Federal Agenda for 2006).

Read more on this report.

I spoke with financial aid officials at the University of Colorado, and at Central Michigan University. Both tell me that changes in the federal student loan program had the short run impact of making new enrollees pay higher interest rates. Its possible those costs would be off-set by a savings if interest rates were to rise above the fixed rate set in the legislation. But it's all based of future economic predictions. Here and now, new students who are applying for these loans are paying more in interest costs than they would have before the legislation passed.

Read a good explanation of how those changed interest rates impact a student's budget.

Read another analysis on S.1932 by the Illinois Student Advisory Council.

The ad's central claim that Bob Beauprez voted for legislation that makes college more expensive for some middle class students is basically true. At least in the short run. The Beauprez camp correctly points out some of the upsides of the legislation from a higher ed perspective. These include provisions that allow students to borrow more money in their first and second years. Beauprez contends that this makes education more accessible to low and middle income students. Financial aid officials are not so sure. The problem stems from the fact that while the caps have been raised in the first and second year of college, the aggregate cap on how much can be borrowed has not been raised. So a student cannot borrow more money for college than the previously established federal ceiling allows. Thus students who borrow more money in the first two years will have to borrow less than they would have been entitled in the final two years of college. It allows some students a little more flexibility, but its impact on making higher ed any more accessible than previously is arguable, unless we're talking about two year junior colleges.

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