WASHINGTON — As student protests and college affordability make headlines, Americans are asking what Congress is doing to help: How can lawmakers improve college accessibility for everyone?
As part of his 2010 budget proposal, President Barack Obama introduced a plan that would help students pay for college, as well as increase college access and completion rates. Following this plan, the House recently passed the Student Aid and Fiscal Responsibility Act, or SAFRA.
This new bill would completely reform the student loan system, which currently consists of two separate components. The first is the Federal Family Education Loan Program (FFELP), under which the government pays back lenders when students default and also provides subsidies to make loan companies more willing to lend to students at favorable rates. The second part is the Direct Loan Program (DLP), under which the government lends to students directly.
The legislation would end the Family Education Program, which the Congressional Budget Office estimated would save about $87 million over 10 years, since the process would no longer involve a middle man, or private loan company. Private companies would still be able to make loans to students under this new legislation; they just would not be receiving government subsidies to do it.
The bill consists of many different components, all aimed at improving the student loan system. The bill would first provide $40 million to increase the maximum Pell grant, which provides loans to the poorest students. It would also fund state and federal programs to increase access and improve completion rates, as well as protect students from high interest rates.
Bruce Cain, director of the University of California Washington Center, said one factor that led to the increase in college tuition was the original stimulus money that was allocated to public universities. These funds targeted research, rather than undergraduate education. Therefore, the funding that makes college more affordable to students was ultimately cut.
One area of focus included in SAFRA is community colleges. Cain said when considering the most-affordable options in the short term, community schools may be the best option.
“If we’re talking about controlling costs, what is it that’s causing the proliferation of costs? It may mean some trade-offs. It may mean more students shouldn’t go to research universities and should start out at community colleges instead, because it’s a very expensive model. When you have research faculty, they have to do research at least 50 percent of the time.”
Research funding takes away from both teaching and undergraduate grant funds, making schools less affordable to middle- and lower-class Americans.
SAFRA would also grant funding for campus modernization, which could include projects like retrofitting buildings to be more energy efficient or updating technology in classrooms.
Opponents of the bill argue it’s “a government takeover” of the student loan industry, since federal subsidies will no longer be offered to private loan companies. Many also argue the bill will limit students’ choice of lender and will ultimately lead to massive job cuts.
The Senate is expected to introduce its own version of the bill soon. If passed, lenders will still have to service student loans that are already in progress, including those backed by federal subsidies.