On Sept. 7, Congress awarded $20 billion to federal student aid programs while cutting federal subsidies to private student loan companies. This award may make college more affordable to students.
The bill, called the “College Costs Reduction Act,” will cut interest rates on federal student loans, increase awards for the Pell Grant, create new grants for
teachers and offer more options for paying
back loans. Options include loan forgiveness based on public service.
Senator Edward Kennedy pushed for the passage of the bill in the Senate and worked on the Conference Report.
“We’ll help millions of students achieve the American dream by providing … the biggest increase in student aid since the G.I. Bill,” Kennedy said in a Sept. 5 press release.
Congress scheduled the bill to go into effect in time for the 2008 – 2009 school year.
The Pell Grant qualifications now include students who were previously denied the grant: those with incomes up to $30,000 and part-time students. The previous income threshold was $20,000.
The awards will also increase incrementally from the current $4,050 to $5,400 by 2011. Rates on new Stafford Loans will go down from 6.8 percent to 3.4 percent by 2011.
More than 80 percent of Mills students receive some sort of financial assistance, including federal loans, Cal Grants, Mills Financial Aid and scholarships.
“It’s going to benefit students,” said sophomore Sally Espinosa. “Money is something I really worry about, so that will be good.”
David Gin, a financial aid officer at Mills College, was skeptical of the bill’s ability to fix the financial aid system. He said that the federal government has reduced support of financial aid over the years, and this bill will not give students much more real buying power.
“This is going to correct some of the problems, but [the government is] doing piecemeal work. They created some of the problems, and now they are trying to fix them,” Gin said.
The funds for the increased student aid will come largely from cutting back the Federal Family Education Program, which provides default insurance and interest subsidies to private lenders.
Executive director of America’s Student Loan Providers Kevin Bruns criticized the bill in a Sept. 6 press release: “This bill punishes the [student lending] industry.
The cuts and nationwide auction are going to punish lenders right out of the program and force families into the government’s bureaucratic direct loan program.”