DES MOINES, IA (11/29/2011)(readMedia)-- State Treasurer Michael L. Fitzgerald is offering a helping hand to teachers across the state for the Iowa Assessment Test by providing students with a new number two pencil to use on test day. The treasurer's program, Prepare for the Basics, is a no-cost program being offered to 2nd and 3rd grade teachers. Last year the program distributed over 12,800 pencils to schools statewide. "Testing helps teachers monitor the growth of students' basic skills," Fitzgerald said. "This program is a small gesture of appreciation to our teachers for their hard work."

Along with the new pencil, students will receive information to take home about College Savings Iowa. College Savings Iowa is a state-sponsored 529 plan designed to help Iowa families meet the continually increasing costs of higher education while providing them with multiple tax benefits, including a $2,865 deduction per account from their 2011 state taxable income.* "Families who begin saving early are better prepared to meet the future educational needs of their children," Fitzgerald stated. "Saving ahead of time may reduce the need to borrow for college, which can help families-and their children-get to graduation with less debt."

Teachers who would like to take part in the Prepare for the Basics program are encouraged to go to the treasurer's website at www.treasurer.state.ia.us. They can register by clicking on the Education tab and then clicking on the Prepare for the Basics Campaign. To ensure timely arrival, materials should be requested at least two weeks prior to testing. The materials will be delivered directly to the participating schools. Supplies are limited, so early registration is advised. For more information about this program, or College Savings Iowa, please visit www.collegesavingsiowa.com or call 1-888-672-9116.

*Adjusted annually for inflation. If withdrawals are not qualified, the deductions must be added back to Iowa taxable income.

###

Grassley said his questions are based on the fact that the campaign implies the actions are being taken independently from Congress, but that it's unclear what statute allows the President to unilaterally alter income requirements for payment adjustments, expand loan forgiveness and make it easier to get out of existing loans.

"I wrote a letter to the President earlier this month asking him to explain to Congress and the public the legal authority he is claiming to implement the student loan changes," Grassley said.  "Our system of government is based on the principle of representative government, so the President can't unilaterally enact laws.  Congress, where elected representatives reflect the will of the people, makes the laws and the President signs or rejects them.  Serious constitutional issues are raised when the President disregards the people's voice as expressed through Congress to change the law himself.  Frustration with the legislative process is understandable, but the process is based on constitutional principles and, in fact, where there is bipartisan support for initiatives the President has offered, proposals have been passed this year."

Here is the text of Grassley's letter to President Barack Obama.

November 9, 2011

President Barack Obama

1600 Pennsylvania Avenue NW

Washington, DC 20500

Dear President Obama,

On October 25, 2011, you announced changes that would provide better repayment terms for a select group of student loan borrowers.  Specifically, the proposal would accelerate the application of changes Congress made to the law effective July 1, 2014 reducing the percentage of a borrower's income from 15% to 10% to calculate payments under the Income-Based Repayment (IBR) plan and reducing the length of time during which a student borrower must make qualifying payments under the IBR plan from 25 years to 20 years in order to be eligible for loan forgiveness.  The proposal also includes a new 0.5% interest rate subsidy for borrowers who agree to consolidate their privately held Federal Family Education Loan Program (FFELP) loans into the government-run Direct Loan Program.  This was part of your "We Can't Wait for Congress" campaign.  However, the announcement was missing some key details and raised some questions that Congress and taxpaying Americans deserve answers to.

The slogan "We Can't Wait for Congress" implies that these are actions you are taking independently of Congress.  However, under our constitutional system, the President can only take actions that are authorized by Act of Congress or that fall under the authority granted to the President in the Constitution.  That raises the question of what specific statutory authority you are using to implement these policy changes.

Please cite the specific statutory language and accompanying legal analysis by which you determined you have the authority to reduce the percentage of a borrower's income from 15% to 10% to calculate payments under the IBR plan in advance of the effective date of July 1, 2014 as provided for in the SAFRA Act as part of P.L. 111-152.

Please cite the specific statutory language and accompanying legal analysis by which you determined you have the authority to reduce the length of time during which a student borrower must make qualifying payments under the IBR from 25 years to 20 years in order to be eligible for loan forgiveness in advance of the effective date of July 1, 2014 as provided for in the SAFRA Act as part of P.L. 111-152.

Please cite the specific statutory language and accompanying legal analysis by which you determined you have the authority to offer a special 0.5% interest rate subsidy for borrowers who agree to consolidate their privately held Federal Family Education Loan Program loans into the Direct Loan Program.

In addition, the initial announcement was vague about the means of implementation for these changes.  While media reports have referred to an "executive order," no such executive order has been issued to date and the announcement only refers to this as part of "a series of executive actions."  In fact, I understand that your Administration plans to implement parts of this proposal through rulemaking procedures used for implementing laws passed by Congress.  Please describe the timeline for this process and why the implementation process is only now beginning.

Also, your announcement claims that, "These changes carry no additional cost to taxpayers."  Obviously, there is some cost to providing improved benefits sooner than the effective date in law.  Presumably this claim is based on estimated cost savings that offset the additional costs.

Please describe in detail the estimated costs of these new benefits and any estimated savings as well as the detailed calculations and assumptions by which those estimated savings were derived.

If the estimated savings are based on an assumption of lower costs due to shifting more existing FFELP loans into the Direct Loan program, then that raises the question of whether the estimate took into account factors that often lead to a significant overestimate of savings, and even revenue generated, through the Direct Loan program as described in the March 2010 Congressional Budget Office Study "Costs and Budget Options of Federal Student Loan Programs."

If in fact moving loans into Direct Lending is the source of any estimated savings, please explain whether your estimate fully took into account administrative costs and default risk as well as the risk to the Treasury of assuming greater debt at a time when our country's ability to borrow money at low interest rates is already threatened by excessive federal debt.

Finally, any discussion of new spending or potential cost savings inevitably involves tradeoffs.  To the extent that this proposal involves spending of limited resources or involves legitimate savings to the federal Treasury, in a time of severely constrained resources, Congress may wish to consider whether there are better uses for these resources, such as reducing the deficit or addressing the funding shortfall for Pell Grants.  Despite a significant infusion of funds provided to the Pell Grant program in the Budget Control Act, there is still an estimated shortfall of $1.3 billion for fiscal year 2012 in order to maintain the current maximum Pell Grant award.  The Pell Grant program is designed to provide access to college for very low-income individuals who otherwise would not have access to a higher education.  To the extent that resources are available, Congress might wish to consider whether this is a higher priority than providing a select number of borrowers who are already on a special repayment plan, and who have already had the benefit of a higher education, the opportunity to have even more of their student loans paid off even earlier.

Such tradeoffs should be made in the light of day with full accountability to the taxpayers, including the majority of student loan borrowers who are paying off their student loans without help and the many hard working Americans who have not attended college.  As such, I request an answer to the above questions no later than November 23, 2011.  Should you have any questions regarding this matter, please contact James Rice of my staff at (202) 224-3744.

Sincerely,

Charles E. Grassley

United States Senator

To compete in the global economy, ensure our long-term prosperity and protect our middle class, I have always believed in the need to provide every Iowa child with a world class education. Iowa has always been known for great public schools-indeed, high school seniors in our state generally score above national averages. Unfortunately, many Iowa students leave school without the basic skills they need to succeed in college or a career. In 2009, only 79 percent of Iowa 12th graders tested above a basic reading level on the National Assessment of Educational Progress, and only 71 percent scored basic or higher in math. Moreover, disparities for low-income children, kids with disabilities, and minorities persist.

As Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, I am leading the effort to reauthorize our nation's K-12 education law and fix the problems in the law's most recent iteration - the No Child Left Behind Act. I negotiated a bipartisan bill that passed the HELP Committee late last month. It now moves on to the full Senate for consideration.

Q: How will the legislation impact Iowa?
The bill overhauls the No Child Left Behind Act by eliminating one size fits all policies that create pressure to "teach to the test." It will allow Iowa to design its own school accountability system and ensure parents and families have access to the information they need about their students. The bill also sets a new, high bar for students to graduate high school ready for college and a career. It will support strong teachers and principals, while giving communities the flexibility they need to address the unique needs of their children.

Q: What are the goals of the legislation?
This long-overdue reauthorization will help ensure that every child has access to a great education that prepares them for success in college and a career in the global economy. It builds on the strengths of current law while getting rid of the policies that have proven ineffective.

Q: Who supports this new measure?
The bill has gained support from numerous groups in Iowa and around the nation such as the Iowa State Education Association, the Iowa Parent-Teacher Association, the Iowa Head Start Association, Save the Children and the Bipartisan Policy Center, among others.

Q: How can Iowans obtain more information on the bill?
Please visit http://harkin.senate.gov/ or contact any of my local offices.

A PDF version of the column is available by clicking here.