The House of Representatives voted to dramatically alter the framework for student loans on Sunday as part of an attachment to the health care reform bill, in a measure that will include a streamlined direct-lending program and a new cap for Pell Grants set to affect Georgetown students.
The Student Aid and Fiscal Responsibility Act, reconciliation legislation that awaits deliberation by the Senate this week, invests $650 million to boost opportunities for college matriculation and successful completion, including efforts to ease federal loan repayments and increase access to historically black colleges and universities, minority-serving institutions and community colleges, according to the SAFRA Web site.
Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee and the author of the legislation, said that the financial aid bill both saves the government money and helps college students in a press release about the legislation.
“Congress voted to stop wasting billions of taxpayer dollars to subsidize big banks, and start investing that money directly in our students and families,” he said. “With this one move, we will help students pay for college, prepare them for our global economy, keep jobs in America and reduce the deficit.”
The bill’s proposed $36 billion allocation to the Pell Grant program, which aids 8 million low-income college students nationwide, would directly impact Georgetown students by increasing the maximum Pell Grant amount from $2,150 to $5,550 for 2010, plus annual increases to the cap until 2018 for inflation adjustment.
On the Hilltop, 823 students currently receive Pell Grants, 286 of whom receive the current cap of $2,150.
A failure to pass the student aid bill – which incorporates cost-efficient measures like the Pell Grant cap inflation adjustment and the direct-lending program – would have left Georgetown, a need-blind university, with a $972,400 deficit in financial aid. This figure would no longer be paid for by the government. The projection only takes into account the maximum Pell Grant receivers.
Scott Fleming, the university’s vice president of federal affairs, said the bill will not significantly change the Pell Grant program at Georgetown.
“I don’t believe that the changes will save the university money except to the extent that it stabilizes the future of the Pell Grant program,” he said. “Many of the students who receive need-based Georgetown scholarships are also Pell Grant recipients, so securing Pell Grant funding would allow Georgetown scholarship funds to provide more help to more students.”
Fleming added that the program will have long-term benefits.
“The fact that this bill makes a significant investment in Pell Grants and provides for future adjustments in the maximum Pell Grant to take into account increases in the consumer price index is very important to ensuring a strong, vibrant Pell Grant program,” Fleming said.
The other key component of the bill for Georgetown students is the switch to direct lending with the federal government, which will no longer have to provide subsidies to private banks that lend to students. Such a switch is projected to save the government more than $61 billion over 10 years, according to the Congressional Budget Office. The federal government intends to pool the savings for future investment in education.
“The direct loan program is a more reliable lender for students and more cost-effective for taxpayers,” the student aid bill’s Web site states.
Patricia McWade, dean of student financial services, said the university has prepared for the change, which is set to take effect on July 1 if the Senate passes the legislation.
“Since the Office of Student Financial Services has already done all the necessary work to prepare to participate in the direct lending program, we will not have to scramble to make direct lending work for us,” she said.
Ultimately, McWade said the new legislation will not have a large impact on the university and its students.
“Passage of this legislation will not affect our current business plan,” she said. “It won’t change the way we operate.”
SAFRA will continue to be discussed on the Senate floor this week, as the reconciliation legislation has yet to be voted on by the Senate.
“Republican senators are vowing to do everything they can to kill the reconciliation bill, including procedural measures [and] trying to get rulings from the Parliamentarian, Alan Frumin [LAW ’71], that would find some aspects of the bill outside the scope of reconciliation,” Fleming said. “
