SAFRA passes House with health care reform

LOAN CHANGES: The Student Aid and Fiscal Responsibility Act, which could change the way federal education loans are distributed, overcame a key procedural hurdle in Congress on Sunday. (Photo by MIchael Arellano)

Overshadowed by the passage of health care legislation in the U.S. House of Representatives on Sunday, the Obama Administration also achieved victory in financial aid reform.

Attached to the health care reform bill’s reconciliation package that was sent to the Senate, the Student Aid and Financial Responsibility Act, or SAFRA, passed the House by a 220-211 vote.

SAFRA aims to complete President Barack Obama’s mission to dissolve the Federal Family Education Loan program and expand the federal Direct Loan program, which would take over all student loan operations by the federal government on July 1.

If signed into law, SAFRA would cut out the banks as lenders in the government’s student aid programs.

The FFEL program, created in 1966 and used by more students than any other loan program, pays banks and private lenders subsidies with each loan taken out. If a borrower defaults on a loan, the federal government covers the lender.

Under the Direct Loan program, the federal government is the sole lender, cutting out the middleman. Federal tax dollars pay for student tuition.

“It’s one of the biggest overhauls of student aid reform this country has ever seen,” said Ben Henderson, vice chairman of the Arizona Students’ Association. “It cuts out all those middlemen and gives a lot more money to a lot more students.”

The SAFRA legislation would increase the Pell Grant from its current amount of $5,350 to $5,550 for the 2010-2011 school year. By 2017, the scholarship would reach $5,975.

The legislation also calls for a $750 million investment in programs that boost college access and retention.

The elimination of the FFEL program is expected to save taxpayers $61 billion over the next 10 years, according to a press release from the U.S. Committee on Education and Labor.

ASU has participated in the federal Direct Loan program since 1996, said Craig Fennell, director of ASU’s student financial assistance. The Direct Loan program was created in 1993 under the Clinton Administration.

“No reorganization [of ASU’s financial aid program] is required since ASU has already moved to the DL program,” Fennell said in an e-mail.

ASA has been advocating for the passage of SAFRA since it was first introduced last July.

“Students are hurting right now,” said Elma Delic, chairwoman of ASA’s Board of Directors. “We need to make sure students have financial aid.”

Delic said grassroots campaigning by ASU, NAU and UA students has been taking place since the beginning of the school year.

For example, ASA helped create a “yearbook of debt” that profiled university students and the amount of debt they had accumulated so far in their college careers. The yearbook was then sent to Arizona’s congressmen.

ASA also made repeated phone calls to the offices of Sens. John McCain and Jon Kyl, asking them to support the SAFRA legislation during a weeklong campaign last semester called “Raising Pell.”

Andrew Clark, chairman of the Arizona Federation of College Republicans, said he likes how SAFRA would make the federal lending system more efficient, but doesn’t believe the U.S. government should be in charge of student lending.

“The problem with using the federal government for anything economically is that there is no competition,” Clark said. “Who are they in competition with … Canada or Mexico?”

Clark said ideally he would like to see the states take control of student financial aid and have them compete against one another.

The House originally passed the SAFRA bill in September in a 253-171 vote. Knowing it did not have enough support to gain 60 votes to overcome a Republican filibuster, Democrats decided earlier this month to attach the legislation to the reconciliation health care bill.

Using the reconciliation option, Democrats in the Senate will only need a simple majority to pass the bill. It cannot be filibustered since the process limits debate to 20 hours.

The reconciliation process can only be used once each year, and has been used 22 times since 1981.

“I don’t think Democrats want to use reconciliation too often,” political science professor David Wells said. “If they can get a two-for-one while using reconciliation, I think they see that as a better political [move] than using reconciliation over and over again.”

Wells said Senate Republicans might play delay games in the debates to come.

“Expect Senate Republicans to introduce all sorts of amendments to try and get Democrats on record and for the Democratic leadership to do their best to vote them all down,” Wells said.

Erica Pederson, president of the ASU Young Democrats, said she is in support of a reconciliation vote to get the health care legislation passed.

“I think a [reconciliation] vote on these amendments is perfectly acceptable, as we should not be wasting any more time in this debate on silly procedural stallings,” she said in an e-mail. “It is clear that the American people want the reforms that President Obama is supporting.”

Reach the reporter at kjdaly@asu.edu