WASHINGTON – Both sides of the aisle in Washington are calling a recently passed higher education bill the most significant advancement toward making college more affordable since the enactment of the G.I. Bill over 60 years ago.
It could save students in the Southern Tier a few thousand dollars a year, Senator Charles Schumer (D-NY) claims.
Raising federal grant awards and cutting student loan interest rates in half over the next five years, the “College Cost Reduction and Access Bill” is “a historic turning point,” said Schumer in a conference call with reporters Wednesday.
“It’s a major change,” he said. “This bill is more important than 98 percent of what we do on the floor in the House and Senate.”
The bill raises maximum federal Pell Grant award from $4,050 to $5,400 and reduces Stafford loan interest rates from 6.8 to 3.4 percent by 2012, two programs that generally benefit lower and middle class students. In total, the package should cost roughly $20 billion – a bill to be footed entirely by the private lending companies that Schumer claims have been living high on the hog for too long.
“Getting a government guaranteed loan at 6.8 percent” he said. “That was outrageous. You could walk into a bank and get better than that.”
However, the loan industry says the law could hurt students more than it helps them, arguing that putting such pressure on lenders could reduce their numbers, services and ultimately the amount of money they front for college kids in the future.
“If some lenders end up leaving the industry there will be others there to take their place,” Schumer countered. “We’re not worried about that.”
According to numbers provided by the Senator’s office, students in the Southern Tier should go from paying $4,500 on average in interest to $2,100 annually. In Central New York, the number should drop from roughly $5,200 to $2,500.
The bill easily passed both floors last Friday. Now awaiting President Bush’s signature, Schumer is confident he’ll sign it into law. However, it’s been reported that Bush’s senior advisors has recommended he veto it in its current form.
“When it comes to helping more Americans pursue the dream of a college education, the federal government’s role has always been to help those students most in need,” said U.S. Department of Education Secretary Margaret Spellings. “Unfortunately, the House bill fails to meet that responsibility. It does little to benefit America’s neediest students and essentially diverts a majority of savings in the bill to individuals out of school rather than focusing on aiding low-income students in school.”
Although the bill increases Pell grants by $5.8 billion, Spelling added that Bush’s budget would have upped the allotment by $19.8 billion.
Aside from grant increase and interest rate decrease, the legislation calls for loan debt relief for those who enter teaching and public service, tuition assistance for students in teaching programs, and increased programs to improve education and college access to minorities.
The interest rate reductions will not apply retro-actively to the 70 percent of college graduates who are already in debt from student loans. However, Schumer says the Senate is developing a bill that would allow them to consolidate their loan payments at the reduced rate.
“Overall, we should see a large, large number of students going to college who didn’t before, a large, large number of students going to the schools they wanted to go to but couldn’t afford, and a large, large number of students that won’t have that debt burden,” said Schumer.