Thanks to massive jumps in the cost to attend college — ASU tuition will rise 20 percent for incoming resident freshmen next year —loans are weighing heavily on the minds of university students.
But student loans are also on the minds of legislators in Congress.
Attached to the health care reconciliation package now in the Senate, the Student Aid and Financial Responsibility Act passed the House of Representatives with a 220-211 vote Sunday.
Expected to pass in the Senate, the SAFRA aspect of the legislation will streamline the process of providing student loans by eliminating the Federal Family Education Loan Program and replacing it with the federal Direct Loan program, which will allow the federal government to take over all student loan operations.
With FFELP, government money has been used to subsidize student loans to banks, picking up the tab when a student defaults on the loan.
By making a full transition to the Direct Loan program, government funds will be available to students directly from the government — eliminating the need for banks as the “middle man” and the federal government to pay subsidies to the bank.
ASU does not currently use FFELP — it has used the Direct Loan program since 1996, meaning ASU students will not be directly affected by the elimination of FFELP.
However, if the legislation passes, proponents say it will save taxpayers $61 billion over the next 10 years by eliminating FFELP, and Pell Grant funding will increase.
According to the University, the number of first-time ASU Pell Grant recipients increased by 60 percent between 2003 and 2008.
In addition, $750 million will be invested to fund programs to boost college access and retention. As a university that has faced drastic cutbacks from the Arizona Legislature — and is in danger of facing even more if a sales tax increase does not pass this May — we’ve had our fill of funding being stripped from education.
Andrew Clark, chairman of the Arizona College Republicans, argued that the measure will reduce competition, creating a monopoly on student loans and allowing the government to set interest rates as high as it likes.
SAFRA has received support from the Arizona Students’ Association and various student newspapers around the country have also endorsed the proposal.
“The bill will help students graduate with less debt while saving taxpayers money. Such action is wise and long overdue,” wrote The Daily Cardinal from the University of Wisconsin, Madison.
“Banks should not be in the business of profiting off the loans of students,” wrote The Daily Reveille at Louisiana State University. “Higher education deserves better.”
We echo our comrades — students who are putting in the effort to attend college and contribute to an educated populace deserve financial support, and the government should not be stuck in debt to banks on account of defaulted loans.
Students should be responsible for paying off loans, and it’s nice to see federal money won’t continue to subsidize the banking industry (we’ve already had our fill of that).
Shoring up the economic downfall is impossible without an educated work force. The SAFRA legislation will make a necessary investment in the future at a time when many states are falling incredibly short in that area.
While the expansion of government is still a concern, the higher education system in the country needs a lift, and if SAFRA will make it easier to support students through that process, then it also deserves support.
