Health is good for your financial aid

The Student Aid and Fiscal Responsibility Act was included in the health care bill that was voted on and passed 220–211 by Congress on March 21 and is being called a “landmark investment” in higher education by program advocates.

Katie Markey, legislative affairs director for ASPSU, said, “If [SAFRA] had not been included in this piece of legislation it would have died in committee this year due to health care and immigration taking a priority.”

SAFRA was created to achieve President Obama’s goal of producing the most college graduates by 2020 by making a large investment in higher education, according to the Committee on Education and Labor Web site.

The impact will be felt almost immediately for students qualifying for the Pell Grant. The changes are to take effect for the 2010–11 school year and beyond.

By investing $36 billion over the next 10 years, the maximum Federal Pell Grant will be increased to $5,550 for the 2010–11 school year.

For Oregon’s First Congressional District, which includes much of Multnomah County, including PSU, $54,738,110 will be invested into Pell Grants. Statewide, the Pell Grant total is $325,205,579. Oregon will also get $750 million to increase funding for the College Access Challenge Grant over the next five years, fund programs focusing on increasing financial literacy and to ensure that students graduate.

Markey said, “Beginning July 1, 2010, federal student loans will originate through the direct loan program. This is a more reliable program for students and more cost effective for tax payers.”

In order to make it easier for students to pay back loans after graduation, the bill invests $1.5 billion in repayment programs so students can cap their monthly payments at 15 percent of their monthly income. After 2014, borrowers can lower their monthly payments to 10 percent of their income, if the borrower has kept up on their payments.

The Committee of Education and Labor argues that the bill keeps jobs in America. Under the bill, Direct Loans must be serviced by private lenders’ employees in the United States. The committee also said that these provisions result in better customer service for students.

The committee also stated that the provisions will reduce the national deficit by $61 billion over 10 years but in a letter to Senator Judd Gregg, the Congressional Budget Office said that if defaults are higher than projected, the estimated savings to tax payers would be closer to $47 billion. The committee also stated the provisions will reduce the deficit by $10 billion from 2010 to 2019.

An example of the success of this feature of the bill, cited on the committee’s Web site, is that last year Sallie Mae had to bring 2,000 jobs back to the United States in order to win a loan servicing contract with the Federal Loan program.

The committee says that by eliminating the Federal Family Education Loan program, the government will no longer have to pay banks more than necessary as an incentive for banks to loan money to students.

Community colleges will see an investment of $2 billion and historically black colleges and universities will see an investment of $2.55 billion.