While most of the attention on the Senate side of the U.S. Capitol is focused on health care, banks and other big lenders have been ramping up their efforts to derail a bill that would expand and improve the federal college loan program.
The Student Aid and Fiscal Responsibility Act passed the House on a bipartisan vote of 253-171 in September, and the measure now is awaiting action in the Senate. It likely will be waiting until there is action on the all-consuming health-care reform bill, but opponents are busily lobbying against it.
This bill would take the middle man - banks and private lenders - out of federally guaranteed student loans. Right now, the U.S. Education Department makes some student loans directly, but the rest - worth millions of dollars each year - are made by private lenders, who then receive government subsidies for doing so. Eliminating those payments will save $87 billion over 10 years, according to the Congressional Budget Office, so the bill will pay for its other provisions.
More help then will be available to more students. Over the next 10 years, $40 billion would be invested in building up the government's Pell grants, need-based scholarships that do not have to be repaid, so the maximum award available could go up annually, to keep pace with rising college costs.
The bill also would allow an additional $6 billion for Perkins low-cost, low-interest loans, thus reducing the number of students who would have to take out private educational loans, which have higher interest rates.
It would help ease the annual headache-producing process of applying for assistance. Currently, the Free Application for Federal Student Aid is a complicated form that requires an eight-page worksheet. The bill would reduce the number of questions and simplify the process.
The Pennsylvania Higher Education Assistance Agency stands to gain because it is one of four companies selected to service the Education Department's $550 billion student loan portfolio.
The over-arching goal of the bill is to make post-secondary education more affordable for students, and Pennsylvania senators Arlen Specter and Bob Casey should be among its supporters.