U.S. Secretary of Education Arne Duncan and two congressmen made the case for passing the Student Aid and Fiscal Responsibility Act in a teleconference with student reporters Tuesday.
Rep. George Miller, D-Calif., heads the House Committee on Education and Labor and said the existing financial aid system is too dependent on the state of the economy.
Under the current Federal Family Education Loan program, federal student aid is distributed through private lenders — the government subsidizes the lenders and provides insurance in case borrowers default on their loans.
“Last year’s credit crisis turmoil showed the program was no longer operational and was on life support,” Miller said. “It doesn’t guarantee students reliable loans and it isn’t good for the taxpayers.”
SAFRA, which already passed the House Committee on Education and Labor, would require all federal student aid loans to come directly from the federal government.
Other provisions include an increase in the maximum amount of money distributed through the Pell Grant from $5,350 for the current academic year to $5,550 next year. Starting in 2011, the scholarship would rise with inflation, as reported by the Consumer Price Index, plus 1 percent, according to a House Committee on Education and Labor report.
Rep. Tim Bishop, D-N.Y., said an important but often overlooked provision in the legislation would simplify the process of applying for federal student aid.
“Anyone who has been through the process knows how difficult and vexing it can be,” Bishop said. “We make it a lot easier to fill out the FAFSA, which is a roadblock for a lot of families.”
A Sept. 11 report by the Congressional Budget Office estimates the plan would generate $67 billion in net savings over the course of 10 years, most of which would come from the elimination of subsidies to private lenders.
“[SAFRA] will make these programs effective and efficient for families and taxpayers,” Miller said. “It’s fiscally responsible.”
About $10 billion of these savings would go toward covering the national budget deficit. The remaining money would fund such programs as online education and community colleges, which Duncan said are crucial to the economy because they produce skilled workers.
“Community colleges are going to help not only individuals and families get back on their feet, they’re going to help the entire country get back on its feet,” Duncan said.
Miller said the legislation has a high level of support in the U.S. House of Representatives because it would reduce spending in addition to increasing federal aid. If the legislation is passed, students could see benefits as early as next year, according to the House committee’s report.
“I think we’ll have this legislation to the president’s desk by the holidays,” Miller said.
The Arizona Students’ Association is planning to hold a rally in front of the Memorial Union from 10 a.m. to 2 p.m. Wednesday, at which students will be encouraged to pressure their representatives to vote in favor of the bill, ASA intern and global health studies freshman Shannon O’Leary said.
“We’re going to try to have students write on postcards how much debt they expect to have after college,” O’Leary said. “Then we’re going to send those postcards to [Rep. Harry Mitchell, D-Ariz.].”
ASA has campaigned heavily for the act, which it says would reduce the cost of attendance and the debt carried by college students after graduation.
“The whole purpose of ASA is to fight for financial aid so higher education is more affordable for students,” O’Leary said. “So [SAFRA] is what it’s all about for us.”
Reach the reporter at derek.quizon@asu.edu.
