August 11, 2006
Panel retreats on proposal to cut student loan aid
I found this article in the Boston Globe recently, and I though parents of college-age students would find this interesting:
By Paul Basken, Bloomberg News | August 10, 2006
WASHINGTON — A Bush administration panel has withdrawn a proposal to eliminate most federally backed student aid after protests from colleges, students, and banks.
“The current situation doesn’t allow the commission an opportunity to understand the details or defend the idea,” Charles Miller, chairman of the Commission on the Future of Higher Education, wrote yesterday to fellow commissioners.
A draft of the commission’s final report included a proposal that would allow federally backed loans only for low-income students. Miller’s withdrawal of the idea removes from consideration a plan that opponents warned could hurt 5 million students and veterans and cost them an estimated $32 billion in benefits.
Miller’s panel is due next month to issue its final report on ways of making college more affordable and relevant to US economic needs. It is to meet today in Washington to review the draft of its final report.
The draft proposed a 45 percent increase in the main federal grant program for college students. The plan also suggested the elimination of 75 percent of the federal loan programs that are not based on financial need.
University and student groups protested, saying the recommendation fails to understand that much of that lending comes at no cost to the federal government.
Even banks expressed concern, since the additional protections help lenders serve middle-income students who otherwise might not be eligible, said John Dean, special counsel to the Consumer Banking Association. The bulk of federally backed student loans are handled by banks that lend to students with a promise of government repayment in the case of default.”