A group of Boston University students gathered at the George Sherman Union Monday afternoon to urge Congress to pass a bill that would increase federal Pell grant funding by $40 billion by reducing government subsidies to private lenders.
BU’s chapter of MASSPIRG, a consumer advocacy group, and the BU Student Government Association hosted the event and asked students walking by to sign petitions encouraging Massachusetts Senators Scott Brown and John Kerry to lend their support to the student loan bill currently being considered in the Senate.
The bill, titled the Student Aid and Fiscal Responsibility Act, was passed by the House of Representatives last September by a 253-171 tally. But the bill has faced resistance in the Senate as private lenders such as Sallie Mae have increased lobbying efforts against the proposal.
In addition to increasing Pell grant funding for students, the bill would eliminate the Federal Family Education Loan Program, which currently offers access to federal loans by private banks to students across the nation. Instead, schools would be required to take part in the federal government’s Direct Loan Program, which offers loans to students directly from the government.
BU is already part of the Direct Loan Program and has been since 1993. Nicole Troelstrup, the president of BU MASSPIRG and a College of Arts and Sciences freshman, said her group decided to host the event to combat Sallie Mae’s opposition.
“If we do not fight back against the lobbying of Sallie Mae the bill may not pass,” Troelstrup said.
Sixty-two percent of Massachusetts college graduates last year graduated with student debt, with an average of $23,125 per indebted student, according to MASSPIRG. Supporters of the bill say that increased Pell grant funding would help reduce the number of students graduating with such high levels of debt.
“Students are having to take out mortgage-sized loans to finance their higher education, driving them deep into nearly $25,000 of debt at graduation on average,” said United States Student Association President Gregory Cendana. “If the United States is going to fully recover from the recession, the federal government must enact long-term, prudent fiscal policies that invest in the future.”
Opponents of the bill, including some Senate Democrats and most Republicans, contend that the student loan act will take away helpful federal loan alternatives for students because competition will be eliminated in the industry.
“In his health care speech to Congress, Obama said that when there is no competition, patients are treated badly, so competition is needed,” said Kevin Bruns, the executive director of America’s Student Loan Providers, an organization made up of lenders that have taken part in the family loan program. “He should apply those same principles to student loans.”
These critics also argue that the end of federal subsidies to private lenders will result in thousands of lost jobs in the industry, to the severe detriment of families already struggling economically.
Troelstrup said private lenders will be just fine if the bill passes, citing the fact Sallie Mae’s CEO Al Lord built his own 244-acre golf course in Maryland.
In the early portion of Monday’s event, the BU groups had collected only a handful of signatures. Troelstrup said she believes that if more students knew about the benefits they would receive from the bill, they would more actively reach out to their representatives to support its passage.
“This bill would increase grant money for students at no cost to the students themselves,” she said. “Right now I just do not think students know what is going on.”
Rachel Rooney, a sophomore in Sargent College of Health and Rehabilitation Sciences, said she hopes the bill passes because it would increase socioeconomic diversity at BU. “Tuition is so high at BU that it deters low-income students from coming here,” Rooney said. “Education is the stepping stone to success in this economy, but money often gets in the way.”
Because the student loan bill has encountered opposition in the Senate, Democrats are now planning to include the bill in a comprehensive budget reconciliation package along with a health care reform bill. Such bills only need a majority of votes, rather than the 60 normally needed to overcome a filibuster in the Senate.
The proposal is expected to start making its way through the Senate this week.
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