Loan Bill Passes; Students Face $3,000 Aid Increase
BY LINDLEY ESTES
The student aid bill, signed on Tuesday, March 30 by President Obama, marked the realization of two of the Obama administration’s primary goals: affordable education and health care reform.
House Democrats added the student aid legislation as an addendum to the health care bill during the final stages of amendment. Though the student loan changes were largely overlooked because of the controversy surrounding the health care bill, the student aid legislation is one of the most significant changes to the lending industry in 40 years.
Over 10 years the bill will generate $68 billion in savings by ending subsidies for financial institutions, the bipartisan Congressional Budget Office reported. Some $36 billion of the savings generated will go to the Pell Grant.
According to the U.S. Department of Education Web site, the Federal Pell Grant Program provides need-based grants to students at postsecondary institutions, with amounts based on the student’s expected family contribution, the cost of attendance of the university and the student’s enrollment status.
According to the Associated Press, half of undergraduates currently receive federal student aid and 8.5 million students are going to college with the help of Pell Grants.
Taking effect in 2014, the legislation would also cap student loan repayments at 10 percent of the graduate’s salary.
The Washington Post reported that the Pell Grant, which is currently on the verge of collapse, would be able to give the average student $5,975 by 2017. The current average amount is $2,770, according to this year’s Pell Grant Status Report.
Instead of going through a middle man, students would apply for a loan directly from the federal government. This process changes operations in the Financial Aid Office of the student’s college or university substantially. New staff may need to be hired and old staff will need to be trained.
Incoming University of Mary Washington students would be able to apply for a grant upon acceptance to the university.
Students have an overwhelmingly positive outlook on the bill.
“If it means bigger grants then I think it’s definitely a good idea,” junior Melinda Waldecker said. “I never know if I can afford to go back to college next semester. Also, I feel like the loans should be directly from the government. Banks shouldn’t make money off of people wanting to go to school.”
Sophomore Sheridan Sayles agreed.
“Going into graduate school, that’s nice to hear,” Sayles said. “As a student paying for it by myself, it’s nice to know that I won’t just get what the banks will allow me.”
“It’s a great idea for the government to stop shady bank practices and lend directly,” senior Rachel Blier said.
Senior Sean Brock has had firsthand experience with government lending and has found satisfactory results.
“When I first took out financial aid it was going through Wachovia,” Brock said. “Wachovia ended up selling it to the government. I have been happier with their service through the government, though. It saves money too, so I’m all for it.”
However, not all students look upon the bill favorably. Sophomore Alex Green thinks the bill gives the government too much power over loan seekers.
“I have mixed feelings,” Green said. “If I need a loan, I’ll be a little upset. I kind of hate the government controlling everything. Big government creeps me out.”