Monday, September 28, 1998
Student loans may attain lower interest rates soon
EDUCATION: Congress grapples with the details of Higher
Education Act
By Edina Lekovic
Daily Bruin Senior Staff
Delayed 10 months by a snail-paced Department of Education and
pushed aside by Congress in favor of sexy bills such as tobacco and
transportation, you might say it’s a miracle the Higher Education
Act was addressed at all.
But largely due to intense lobbying by the United States
Students Association (USSA) and the U.S. Public Interest Research
Group (USPIRG), students may win advances in financial aid.
If the act is re-authorized by Congress and the president,
students will experience a 0.8 percent decrease in student loan
interest rates, which are currently 8.2 percent. The amendment
could save student borrowers hundreds of dollars annually.
"Not only has USSA helped ensure expansion of educational access
through grant aid, we are also at the forefront in designing new
initiatives to tackle the opportunity gap and win concrete
victories in the struggle for social justice," said Anthony Samu,
USSA president.
Persistent lobbying efforts to keep the act from getting
derailed from its original intentions appear to have paid off.
Enacted in 1965 under the Johnson administration, the Higher
Education Act effectively created the federal financial aid system,
which aimed to increase educational access to impoverished
students.
If passed in its current form by Congress and signed by the
president, the act will significantly lower interest rates on
student loans, increase Pell Grant awards and expand educational
outreach efforts.
After reviewing separate bills passed by the House and the
Senate, congressional representatives are in the process of
negotiating the final version of the bill. Officials are hoping
this bill will reach the Oval Office by October.
Both bills would decrease interest rates on loans, increase the
maximum amount of Pell grants and expand educational outreach
programs.
Recommendations from 21 colleges and universities proposed few
changes from existing law but urged Congress to let dependent
students who work earn significantly more money without losing
eligibility for Pell Grants.
The recommendation was included in both the House and Senate
bills.
The law currently states that dependent students can earn $1,720
a year, without having the government consider those wages in
calculating the family’s eligibility for aid.
The House version of the bill would increase that amount to
$3,000 – $5,500 for students who have declared themselves
independent of any other financial support. The Senate version is
less generous, and would only increase the cap to $2,200 ($4,250
for independent students).
Both bills would also create educational outreach programs.
Amendments include grants to state- and-college school partnerships
to improve the quality of teacher-education programs, and the
expansion of early intervention programs to give children from
low-income families the support needed to go on to college.
While the two bills differ in numerous minute ways, students and
educators are preparing to make a final all-out effort to ensure
that lawmakers understand student needs before the final bill is
drafted.
Like her peers at USSA, Liz Geyer is pushing for the Wellstone
Amendment, which would ease restrictions on the 1996 welfare-reform
law imposed on recipients who wish to go to college.
"The Wellstone amendment was a big victory because we had a lot
of opposition. There’s a lot of glitches," said Geyer, who is
external vice president of the Undergraduate Student Association
Council (USAC).
"Single mothers who were going to college didn’t get the
opportunity to go to work and go to college, so this allows states
at the very least to change the number of weeks that you go to
school and at the most to count school as work," Geyer
explained.
Sen. Paul Wellstone, D-Mich., spearheaded the amendment, which
would make it easier for welfare recipients to go to college
without also having to work. The House bill has no such
amendment.
"We think it’s essential for Congress to make a true commitment
to families that are trying to break the cycle of poverty," Samu
told the Chronicle of Higher Education.
Student lobbyists expect another battle over an amendment which
would eliminate origination fees on student loans.
"USSA has long been active in the battle to eliminate
origination fees, which unjustly require students to pay hundreds
of dollars just for the ability to take out a loan, and which
result in students paying interest on money that we never see,"
said Jamie Pueschal, legislative director of USSA.
"As students, we need every penny in order to meet rising
expense costs," Pueschal said. "This will do much to alleviate some
of the burden for the millions of needy students suffering under
continually escalating loan debt."
Ten years ago, the ratio of loans to grants was two to one.
Today, however, students receive nearly five loans for every one
grant.
Analysts say this will mean a shift of responsibility from
parents to students for financing higher education.
Due to this added responsibility, more and more college students
are being forced to work longer hours in order to stay in
school.
"College students are victims of the popularity of user fees,"
said Terry Hartle, vice president of the American Council on
Education.
"’Let the beneficiaries pay’ has become a popular refrain at all
levels of government," he said.
Hartle foresees that students will be forced to borrow more and
more as a result of this shift in financial responsibility, since
many financially pressed state legislatures have forced public
colleges to increase tuition sharply in recent years.
"The truth is that nobody really knows how the vast increase in
borrowing will affect students’ behavior," said Hartle, who was the
director of the education staff of the Senate Labor and Human
Resources committee during the 1992 reauthorization.
"But we are deluding ourselves if we think that it will not
result in changes," he continued.
With students projected to borrow over $30 billion this year,
Hartle may not be far off in his estimations.
However, at least one official believes that financial aid is
being handed out far too generously. In fact, Boston University
Associate Provost Peter Wood argues that "excessive federal
assistance lures students who lack adequate preparation, academic
ability or serious intellectual aspiration into academic programs
that are inappropriate for them."
Wood’s comments were published in The Chronicle of Higher
Education.
He is among those who argue that the Higher Education Act has
altered the character of American higher education for the worse,
citing that the current loan system, while originally weighted
toward grants, was simply a by-product of an act aimed at helping
impoverished students.
While he concedes that access to higher education has expanded
greatly, Wood argues the ultimate cost has been a fall in academic
standards at the university level in order to make more money.
The final version of the Higher Education Act is now being
hammered out by members of Congress from both chambers, and a final
version of the bill, if approved, should reach the Oval Office by
mid-October.
"USSA and our student organizations should be proud of the
changes we have seen in higher education this year," the
organization’s fact sheet states.
"While we should applaud our successes, we also need to be
prepared for the coming challenges of making access to education a
top priority."
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