Sunday, September 20, 2009

Houses Passes Student Aid overhaul, will reduce national debt and student debt

There's been very little coverage of it, but last week the US House of Representatives passed a major overhaul of federal financial aid, which will redirect money that has been used to subsidize for-profit banks as incentives for issuing student loans (isn't that what interest payments are for); instead, that money will be used directly for financial aid in the form of Pell Grants and as additional loan money that will be available for students to borrow in a more competitive market (rather than one distorted by subsidies to for-profit banks).

It will also vastly simplify the process by which students apply for federal financial aid, cutting administrative costs.

The result is a bill that will both increase substantially the amount of aid available to students in the form of grants or loans AND cut the national deficit.

The AAUP, and the Nevada Faculty Alliance, have long supported measures to make college more affordable, and we are pleased that this measure has passed the House. We hope it will pass the Senate and we urge faculty, students and others interested in making higher education more affordable in Nevada to support this bill.

The Student Aid and Fiscal Responsibility Act is the largest single federal investment in higher education in American history and will also be used to pay down the national debt [H.R. 3221, #719, 9/17/09]

· The measure will make federal student lending more efficient through a variety of reforms that will save the federal government $87 billion. Of those savings, $77 billion will be invested toward making college more affordable and $10 billion will be used to pay down the national debt.

· These savings will be achieved through a number of reforms including:

o Converting federal lending to the Direct Loan Program.

o Establishing a competitive bidding process, allowing the U.S. Department of Education to select lenders based on how well they serve borrowers.

o Allowing non-profit organizations to continue servicing student loans.

· This measure will increase the amount of Pell Grants in 2010 and 2011, lower the interest rates of federally subsidized student loans, expand the Perkins Loan program, and streamline the application form for financial aid.

No comments:

Post a Comment