House passes bill to increase student aid, access to low-income loans

Major national reforms in the student loan industry moved one step closer to becoming a reality Thursday.

The House of Representatives voted 253-171 in favor of a bill that would increase student aid and access to low-income loans by cutting federal subsidies to private banks.

The Senate is set to take up the Student Aid and Fiscal Responsibility Act, a bill sponsored by U.S. Representative George Miller (D-Calif). If passed, the bill would increase Pell Grants through a $40 billion investment in the program, allow more campuses to offer low-income Perkins Loans and simplify the Free Application for Student Aid.

The passage of the bill would also end the Federal Family Education Loan Program, which currently offers access to federal loans originated by private banks at campuses throughout the country. Supporters of the bill, including House Speaker Nancy Pelosi of California, said cutting billions of dollars in subsidies to private lenders would mean more money going towards student aid.

‘This bill is the single largest investment in making college affordable in the history of our nation,’ Pelosi said during a conference call Thursday with media outlets, including The Daily Free Press. ‘[The bill] is about investing wisely, and taking profits away from the banks to lower the interest students have to pay.’

U.S. Secretary Arne Duncan was equally as enthusiastic in his praise of the bill.

‘This bill will help millions more students go to college without asking for a dollar from taxpayers,’ Duncan said during a conference call with reporters on Tuesday prior to the House’s passage of the bill.’

Supporters also highlighted that the bill will help take $10 billion off the federal deficit.

‘This is the best deal for the taxpayers, the students and the deficit,’ Miller said.

Opponents of the bill, including Republicans and private lenders, argue that the student aid act will take away choice for students because competition will be eliminated in the federal loan industry. These critics have compared what is happening in the loan industry to President Barack Obama’s plan to reform healthcare, and have accused the Obama administration of continued government expansion at the expense of the American public.

‘There is a pattern developing of the federal government a playing larger role in our everyday lives,’ said Alexa Marrero, a spokeswoman for Republicans on the House Education and Labor Committee. ‘The fact that the legislation permanently eliminates the role of the private sector in lending means that choice, competition and innovation will be eliminated in the student loan industry.’

When asked if she was concerned that students would now have fewer choices for federal loans, Pelosi responded in the negative.

‘This bill expands opportunities for students,’ Pelosi told The Daily Free Press.

Instead of the federal family loan program that a majority of U.S. universities use to offer students federal loans through private lenders, all schools will be required to take part in the government’s Direct Loan Program. Boston University has taken part in Direct federal loans since the program’s inception in 1993.

‘Direct loans are in the best interest of our students and reduce the cost of borrowing,’ said BU Spokesman Colin Riley.’

Critics have said the federal family program provides more services to borrowers, which will fade with the passage of the student aid act. Miller disagreed.

‘The Direct loans are equal in every way to the loans the banks give,’ he said.

The student loan act will also invest $2.5 billion into programs designed to help low-income students complete college. The funding will be open to both public and private universities.

‘We want to increase college graduates, not just college goers,’ Secretary Duncan said.’

Supporters said they think the Senate will have a bill for Obama to sign by the middle of October.
‘