It's not often that Congressional legislation can have a deep and profound impact on students' lives, but the House has a chance to do something big for us today.
The House of Representatives is expected to vote today on the Student Aid and Fiscal Responsibility Act (HR 3221). If passed and signed into law, this bill would save taxpayers nearly $90 billion in the next 10 years by moving control of most student loans from private, subsidized banks to the Department of Education. Currently, the government subsidizes private corporations to administer the loans, and the change would allow the government to loan money directly to students.
And if the savings weren't enough, the act will also broaden the pool of students eligible for Pell Grants - a type of education grant that is targeted at students from the lowest socioeconomic backgrounds - and increase the maximum award for Pell Grants. In recent years, as tuition has spiked and the grant award remained stagnant, the grants have covered fewer and fewer credit hours - effectively forcing students to turn to both federal and private loans. A portion of the savings to taxpayers will fund the increase in loans.
In recent weeks, the student-loan industry has pushed back against this bill, knowing how greatly it will curtail its business. . The beleagured industry ran into huge trouble during last year's financial crisis, and has been plagued by scandal in recent years, as many executives were found taking kickbacks from colleges and universities.
Private lenders have shown that they are more trouble than they are worth, and redirecting the savings into expanding grants to students is an excellent, efficient redistribution of resources. We hope the House passes this bill.
