House Approves Overhaul of Student Aid Policies
The House of Representatives approved legislation Thursday to overhaul the federal government's student lending policies. This is a major legislative victory for President Obama, who considers signing the Student Aid and Fiscal Responsibility Act of 2009 into law a top domestic priority, Inside Higher Ed reports.
If approved by the Senate, the student aid bill will cease all lending from the bank-based Family Federal Education Loan Program and reroute the savings from this shift to a wide range of programs, including some outside of higher education.
"This legislation provides students and families with the single largest investment in federal student aid ever and makes landmark investments to improve education for students of all ages—and all without costing taxpayers a dime," Rep. George Miller, chairman of the House Education and Labor Committee, said in a news release. "Today the House made a clear choice to stop funneling vital taxpayer dollars through boardrooms and start sending them directly to dorm rooms. This vote was a historic triumph for America's students, families, and taxpayers—and will ensure that their interests never again take a back seat to lenders and big banks."
Among other things, the legislation would:
- Provide $40 billion over 10 years to increase the maximum Pell Grant to $5,550. The maximum grant level would increase annually by the rise in the Consumer Price Index plus 1 percent.
- Greatly expand and alter the criteria for the Perkins Loan Program.
- Pour $10 billion into community colleges to support Obama's American Graduation Initiative, designed to produce 5 million more two-year college graduates by 2020.
- Spend $8 billion over 10 years to strengthen early childhood education.
- Create a College Access and Completion Fund that would give grants to states and institutions that have innovative approaches to increase the number of students going to college and their graduation rate.
- Provide $4.1 billion to modernize and repair school and college facilities, including those damaged by Hurricanes Katrina and Rita.
- Make the interest rates on federal student loans variable, beginning in 2012. They are set to rise to 6.8 percent that year.
- Simplify the federal financial aid form.
Many lenders oppose the proposal to end lending through the FFEL program, saying the change will eliminate jobs and competition. Though Democrats claim the bill had bipartisan support, it garnered just five Republican votes in the 253-to-171 tally in the House.
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Tags: colleges | financial aid | paying for college
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Good
The only competition is by the greedy, attempting to see which one can hike there rates the hightest, the fastest.
The government is already involved in student loans because they guarantee repayment. And the argument about loss jobs by the government re-taking this process, well, job losses happen everytime banks consolidate anyway.
student loans
As usual the "socialism detectors" among us see nothing but unprovable conspiracies and hidden agendas when a little actual knowledge about this industry might explain (well no they'll just move on to some other scream festival) things.
1. The industry is already socialized. The money is "lent" by the financial institution, but guaranteed by the federal government. The loan goes into default and in a matter of hours it is purchased by the government.
2. As for you getting a loan or being denied a loan for any political or religious affiliation please see The Higher Education Act of 1965 and its subsequent amendments, the Truth in Lending Act, the anti-discrimination remedies available in the Civil Rights Act of 1965 and its amendments, and any of your state lending and usury law regarding such discrimination. There is a lot to choose from and your state Dept. of Banking (or equivalent) can help you along with the Dept. of Education, the Treasury Dept. and the Commerce Department Consumer Protection Office. Nice that government looks after this isn't it?
3. You'll notice that the banks are complaining a lot, but Sallie Mae isn't making such terrible noises about it. Well that's because the reform leaves collection of student loans in the hands of private industry and that is where the real money is. Sallie Mae gets 1/3 of all the money students send in on loans in default. So guess where their incentives are? You bet, put 'em in default and make a fortune collecting the money. Banks are upset because their easy money making risk-free loans is gone.
Overhaul of Student Aid Policies
I personally couldn't be happier to hear that reform measures in addition to those involving health care are in the mill. College aid is too important to leave to private lenders, their profit-driven motives adding too much to amounts borrowed by students.
In 1958, I finished my four-year enlistment in the Air Force and was in need of financial assistance to start college. At the time, a very generous, renewable loan was available to everyone through the federal government's National Defense Education Act. Repayment was interest-free until after graduation, with deferral possibilities for post-graduate work. It took me almost 10 years to repay, and the amount repaid in total was just a few dollars more than the principal of the loan.
Those who fear yet "another" move toward socialism in this country simply do not know their history or what they're talking about. They need better sources of information than they presently have obviously.
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