Saturday, March 20, 2010

Financing for College to be Voted On Tomorrow

In addition to the Health Reform Bill, the Student Aid and Fiscal Responsibility Act (SAFRA) will also be part of the budget reconciliation bill to be voted on tomorrow.

SAFRA will increase the size of the Pell Grant that will amount to an investment of $488,354,485 in Mississippi over the next 10 years. 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 - $9,254,555 in Mississippi over the next 5 years. It also invests $69,894,610 in Mississippi’s Historically Black Colleges and Universities. A competitive grant program for community colleges will be established.

SAFRA will also total revamp the current student loan program. Right now these loans are through private banks but guaranteed by the federal government - and these has proven to be extremely expensive for students and for the federal government. Beginning July 1 this year, the loans will return to direct loans from the federal government, which have proven to be more stable, effective, and cost efficient. Payback schedules will be established based on the students' income. The loans will be serviced by private lenders, but unlike bank loans, these loans can only be serviced by US workers.

According to the nonpartisan Congressional Budge Office, returning to direct loans will save enough money to pay for this entire program - AND reducing the deficit by $10 billion over 10 years.

One more reason to hope that President Obama and Speaker Pelosi find 216 votes in the US House tomorrow.


Jane said...

Casey, Thanks for the informative post. Who would not vote for this reform bill just on this info alone. With a son in college, I am certainly interested in this and remember some awful debacle with Sallie Mae years ago (not sure of details of that), but this system can only be improved.

Casey Ann said...

At some point Congress decided to "privatize" the student loan process - and it was a disaster. Thank heavens they're coming back to their senses. And the Pell Grants had been decimated during the Bush years. As Obama said, this is our most important investment in our future.

Elizabeth said...

Good post, Casey Ann. It's harder for me to keep up with things from England so I appreciate informative posts like this one.

Fingers crossed for today!

Merisi said...

I am reading this long after the vote and am glad that SAFRA passed! Thank you for this information!