President Obama’s Student Aid Proposal
On September 17, the House approved the president’s student aid proposal to eliminate bank-based student aid and convert all loans into direct lending. The bill also provides a $40 billion increase over 10 years for the Pell Grant program, and a six-fold increase in capital for Perkins loans.
In addition, the bill includes a provision that recognizes the special governance structure of independent colleges and universities. In an effort led by Education and Labor Committee Chair George Miller (D-Calif.), a provision in the House bill was included that allows private colleges to opt-in to any state-based efforts to improve college completion, and specifically states that private colleges cannot be forced into state student unit record system as a result of participating.
The most important victory for students is the $40 billion increase in funding for the Pell Grant program, with the maximum grant projected to increase from $5,550 to $6,900 by 2019. The six-fold increase in capital for the Perkins loan program essentially means that students with a gap between their final aid packages and the cost of attendance will have access to more low-interest federal loans. These student benefits and the other programs included in the bill will be paid for by the mandated switch to direct lending.
There is an October 15 deadline that the Senate Health, Education, Labor and Pensions (HELP) Committee must meet for producing a student aid reconciliation bill. Rules set forth in the FY 2010 budget resolution allow for a bill on health care reconciliation and one on student aid, but if they are written separately, they must be combined into one for final passage.