Editorial: House passes student aid reform bill

Posted on Monday, September 21st, 2009, 12:41 am

On Thursday, Sept. 17, the U.S. House of Representatives voted to approve the Student Aid and Fiscal Responsibility Act (SAFRA). The bill would reinvest $40 billion into Pell Grants to help low-income students attend college and end subsidies to banks receiving them through the Federal Family Education Loan program. The money taken from FFEL will be redirected into the Direct Loan program, which provides loans to students originating from the Department of Education.

The Congressional Budget Office projects that SAFRA will save U.S. taxpayers $87 billion over 10 years by switching into the Direct Loan program, which is cheaper to administer and less prone to the fluctuations of the financial market.

Additionally, the bill allocates $8 billion back to the treasury, to make a dent — albeit a small one — in the deficit. It would also streamline the Free Application for Federal Student Aid by allowing students and their parents to apply simply by providing the information on their tax forms.

Provisions in the bill would tie interest rates on federal loans to inflation and cap it at 6.8 percent by 2012.

Lastly, the bill would inject $6 billion into school-based Perkins Loans, providing more student with options other than predatory loan companies.

Provisions in the rest of the bill include funding for historically black colleges and universities, as well as other minority serving institutions, and renovating community college campuses desperately in need of repair.

With unemployment now squarely in the double digits, our educations are more important than ever in securing employment. Loans originating from the federal government come with a repayment programs that private loans do not and often include lower interest rates.

We applaud the representatives who passed what amounts to the largest higher education aid reform bill of our lives. We hope the Senate follows suit.