October 22, 2007

The politics behind financial aid

Posted in Student Loan News at 7:11 AM by Joe From Boston


Here’s an interesting opinion piece from the Saratogian about the politics behind the recent bills regarding financial aid.

College Bound: Financial aid gets political

With the national political scene swinging into high gear, families facing payment for higher education stand to benefit from a compromise version of a bill originally passed by the House of Representatives in July of this year. President Bush had said he would veto the original House bill, and had severely criticized the Senate version as well.

Last month, however, the US Department of Education announced that President Bush would sign, not veto, compromise budget reconciliation legislation that would tighten federal subsidies given to student loan providers.

The savings of about $22 billion would then be directed to increase the maximum federal Pell Grant to $5,400 (currently at $4,050) over the next five years and reduce the student loan interest rate by 50 percent over the same period. The move seemingly will avoid providing the Democrats with the campaign ammunition that the president had protected the excess profits of “fat-cat lenders” at the expense of American families.

Samara Yudof, a spokeswoman for the Education Department, said that Education Secretary Margaret Spelling had worried that the compromise bill would spend about $1 billion on new entitlement programs and that the interest rate cuts would end after four years, “pushing tougher fiscal decisions into the future … an irresponsible way to make policy.”

However, Yudof said that the secretary ultimately advised Bush to sign the bill, as it “answered the president’s call to significantly increase funding for Pell Grants.” The Democrats quickly scoffed the idea that the Bush Administration deserved any credit, citing the sponsors as senators Edward Kennedy of Massachusetts and George Miller of California in what Democratic leaders called the largest infusion of federal student aid since the GI Bill.

The bill also seems to make good on a campaign promise made by the Democrats last November to make college more affordable to every qualified student. Most of those promises surrounded the federally backed student loan interest rates, which now stand to be cut from their current rate of 6.8 to 3.4 percent over the five year period by this bill.

I prefer to think of this as a bipartisan step in the right direction, hopefully the first of many needed to truly keep college costs affordable to everyone. Most families do not qualify for Pell Grants, and current borrowing limits on federally backed Stafford loans compared to the total cost of college make them a small percentage of the financing picture for those who qualify.

The bill does, however, provide some relief and indicate that both sides of the aisle are aware of the significant associated costs and the growing problems facing families trying to provide higher education for their children. Both are a good start, no matter whose ideas they are.

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3 Comments »

  1. […] post by moniqueleonard This was written by . Posted on Monday, October 22, 2007, at 7:11 am. Filed under Politics. […]

  2. […] natasha wrote an interesting post today onHere’s a quick excerptLast month, however, the US Department of Education announced that President Bush would sign, not veto, compromise budget reconciliation legislation that would tighten federal subsidies given to student loan providers. … […]

  3. […] Original post by moniqueleonard […]


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