Financial Aid: There is No More Choice

Attached as an Amendment to the “health care reform” deemed to have passed the House of Representatives and voted on in the Senate as part of reconciliation, was a provision known as “The Student Aid and Fiscal Responsibility Act” that forces potential college students to get financial aid directly from the federal government. US Senator Lamar Alexander said, “The government will borrow money at 2.8 percent and loan it to students at 6.8 percent, then spend the difference on more government. Any savings should go to the students, not the government.”

The House Committee on Education & Labor says that by converting “all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through the federally-guaranteed student loan program. The Direct Loan program is a more reliable lender for students and more cost-effective for taxpayers.”
And will:
“Invest the bill’s savings to make college affordable and help more Americans graduate
* Invests $36 billion over 10 years to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $5,975 by 2017. Starting in 2013, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index. This includes an investment of $13.5 billion to fund a shortfall in the Pell Grant scholarship program due to increased demand for the scholarship.
* Invests $750 million to bolster college access and completion support for students. It will increase funding for the College Access Challenge Grant program, and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
* Makes federal loans more affordable for borrowers to repay by investing $1.5 billion to strengthen an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.
* Invests $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate.
* Invests $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs.”

While this reform may make it “easier” for students to get financial aid, it ignores the real question. Why is college so expensive?
There are many reasons; increased administrative costs, increased teacher salaries both play a part, not to mention easy money that helps drive the cost up.
This “reform” will not bring down the cost of higher education, only a change in the philosophy of college presidents and administrators will bring costs down.