HUGE Boost For Students On the Way?
July 17, 2009 - 12:21am ET
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Debt saddled students may finally get the help they need to pay for college. The Student Aid and Fiscal Responsibility Act – if passed by Congress – provides the largest post-secondary reinvestment in decades. Following the commitment outlined by Obama earlier this year, Congress is now taking the lead, showing that quality, affordable college education is critical to move the country forward.
Below is the boost to student aid outlined by the legislation:
• Investing $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2010, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent;
• Investing $3 billion to bolster college access and completion support programs for students;
• Strengthening the Perkins Loan program, a campus-based program that provides low-cost federal loans to students;
• Keeping interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012;
• Making it easier for families to apply for financial aid by simplifying the FAFSA form;
Additionally, the bill invests $10 billion in community colleges, off the heels of Obama’s recently announced American Graduation Initiative that looks to add 5 million more graduates over the next decade.
This is a significant step, recognizing community colleges as an integral part to post-secondary education.
But the most transformational provision is an end to the billions in subsidies received by private lenders under the Federal Family Education Loan Program. By redirecting these loans to the government’s Direct Loan Program, the move will save nearly $90 billion over ten years, while freeing resources to reinvest in the student aid initiatives mentioned above.
Why This Bill is Needed Now
College affordability and completion rates have become absolutely abysmal in America. Just take a look at these disturbing trends:
- Historically Pell Grants covered 77 percent of total college costs. Now it’s down to a third.
- 49 states receive a grade of F (failing) on college affordability.
- 1.7 million to 3.2 million students over the next decade will NOT choose college because of costs.
- Nearly half of all students attending a two-year institution drop out; one-in-five students pursuing a bachelor’s degree never finish.
- The U.S. once ranked first in college attainment, today we rank nearly last among OECD countries.
Let’s Get This Passed
Of course the bill has its opponents, with some members of Congress siding with banks to kill the move to Direct Lending (read: preserve bank subsidies). Sen. Lamar Alexander (R-TN) explained his opposition to the bill, “What [Obama’s] doing is taking over the student loan program and depriving individuals — 15 million students — of their choices of many different kinds of student loans.”
BUT ,we know the current system is broken and has failed us. Too many students either avoid college due to costs or graduate with mountains of debt. That is why the passage of this bill is so important. By ending bank subsidies, greatly expanding student aid, and investing in our community colleges, we can ensure that the doors to college remain open to all for years to come.
Tell Congress to put Students before Banks, and pass this legislation HERE.
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