President Obama considers signing the Student Aid and Fiscal Responsibility Act of 2009 into law a top domestic priority. Though Democrats claim the bill had bipartisan support last month, it garnered just five Republican votes in the 253 to 171 House vote.
If approved by the Senate, the student aid bill will cease all lending from the bank-based Family Federal Education Loan (FFEL) Program and shift some of the funding involved in the FFEL program to a broad range of programs, including some that are not related to 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, stated in a news release.
Many lenders oppose the proposal to end lending through the FFEL program, saying the change will eliminate jobs and competition. Those who work in financial aid offices are also concerned that the rush to put everything into place by next July will mean that students may have difficulty solidifying aid packages going into the 2010 academic year. Other prominent figures in higher education see the legislation as another way in which college and university students will be forced to pick up more expenses for their education, as funding options are taken away and student loan interest rates become variable under the legislation. Some politicians question the need to extend federal expenditures in a time when excessive spending has constituents gunshy about adding to the ballooning deficit. Still others question why those who often can afford it the least, namely college students at all levels, will be required to subsidize programs that have little if anything to do with college attendance.
Key points in the legislation include:
* Provide $40 billion over 10 years to increase the maximum Pell Grant to $5,550.
* Expand the criteria for the Perkins Loan Program.
* Create a $10 billion fund for community colleges to support Obama's American Graduation Initiative.
* Spend $8 billion over 10 years on early childhood education.
* Create a College Access and Completion Fund for grants to states and institutions to increase the number of students going to college.
* Modernize K-12 school and college facilities, including those impacted by Hurricanes Katrina and Rita.
* Make the interest rates on federal student loans variable, beginning in 2012 when rates will rise to 6.8% under the plan. (It will mean that the once a year reset will be abandoned for a model resembling credit card interest rate policies.)
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Janelle Jalbert is the founder of Edusistance and the creator of the Race to College Success program. She has been an educator and advisor for more than a decade. You can reach Janelle by email, follow her on Twitter @RacetoCollege or @edusistance, and add yourself as a fan of the Race to College Success Facebook page.