Student Aid Bill: Will It Finally Pass?

Mar 15th, 2010 @ 3:03 PM by Debbie Dragon

The student loan bill is back in the news this week. The bill that would put the government in charge of dispersing student loans instead of commercial lenders passed by the House last year but has yet to pass in the Senate. Private lending lobbyists have been working overtime to stop the bill, and have succeeded in the very least by stalling it in the Senate. The bill was originally predicted to save the federal government around $87 billion over a ten year time period. New cost saving estimates show that the number may be closer to $61 billion.

Currently the federal government backs student loans for private lenders, which is costly. Private lenders obviously would lose a lot of business if the bill was to pass and they are doing all that they can to fight it. Under the bill, students needing to take loans would see a break in lending fees and interest rates, which are currently imposed by private student loan lenders.

By taking over student lending and dispersing the money themselves, the government would free up money that could be put to good use elsewhere. Original plans were to use the savings for a number of underfunded needs. These needs included further funding of PELL grants for low income students, providing low interest loans for students with financial needs, providing funds for community colleges and helping to fund institutions serving minority populations.

This week Congress is combining the Student Aid Bill with the Health Care bill in hopes of getting them passed. Many supporters of the bill are not keen on this, as some of the savings the bill is anticipating most likely will now be shifted to healthcare reform. As of last week, healthcare reform funding was short $1 billion in funding. On the flip side, many believe that this may be the only shot this bill has at passing.

Under the combined bill, less funding would be available for PELL grants but they would still remain a top priority. George Miller, D-Calif., Chairman of the House of Representatives Education and Labor Committee at a recent press conference said, “For millions of Americans, Pell Grants are a pathway to prosperity. They have become America’s great equalizer.”

On the down side, community colleges would most likely not see a dime. The bill is expected to be voted on by week’s end or at the latest early next week.