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July 22, 2009 -- Journal Gazette (IN)

Critics Try To Soften Souder Law

By Sylvia A. Smith, Washington editor

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WASHINGTON -- A House committee eased restrictions Tuesday on students who are convicted of drug possession, erasing a provision authored by Rep. Mark Souder, R-3rd, that limits their access to federally guaranteed student loans.

As part of a bill to shift college loans to a government-run program and away from private lenders, the committee agreed to loosen the law, which Souder wrote a decade ago.

Under the change -- which would not go into effect unless it is approved by the House and Senate -- limits on student aid would continue on students convicted of selling illegal drugs. But students convicted of possession would no longer risk losing the scholarships, loans and work-study assistance underwritten by Washington.

"If you are going to get subsidized loans," Souder said, "you shouldn't be convicted of a drug crime."

But Democratic members of the Education and Labor Committee said the law disproportionately targets minorities and that society should want to help a former drug user who wants to get a college education.

Souder said the current law gives students plenty of opportunity to start over because for the first couple of offenses, access to federal aid is suspended but not eliminated. It's not until a student has been convicted of a third drug offense that access to federal loans and grants is barred, he said.

Under current law, students who are convicted of possessing or selling illegal drugs while they are receiving federal student aid can lose all or part of their aid eligibility. For a first drug-possession offense, ineligibility lasts a year after conviction; for a second offense, two years. More convictions bar aid indefinitely.

A single drug sale conviction means no aid for two years afterward; more convictions, and the ban lasts indefinitely.

The change to what has become know as the Souder Law is part of a bill the committee approved to end a government-backed student loan business that was at one time lucrative for banks and institutions such as Sallie Mae.

Most student lending would be shifted next year from the Federal Family Education Loan Program to the direct-loan program run by the Education Department.

"We will finally end wasteful taxpayer subsidies that are keeping a broken system afloat," said committee Chairman George Miller, D-Calif.

The legislation largely embraces a proposal by President Obama.

Most Republicans on the committee opposed the change.

Souder, for instance, said the shift to direct lending to students "creates a huge bank, the largest in the world" and that lawmakers who favor the change think "that profit is somehow a dirty word."

Obama said the change would save $87 billion over the next decade. But Souder said the reason it looks like the federal government can run the program more cheaply is not because the banks' profit is eliminated but because the government's overhead costs are not calculated.

Miller said the $87 billion would be used to increase the maximum amount of Pell grants and reduce the federal deficit.

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