The U.S. Congress passed a bill last week that will boost college financial aid to $20 billion, taking money from government-subsidized lenders to increase Federal Pell Grants and decrease fixed-interest rates for student loans.
U administrators said this would provide more money for students who need loans.
“It’s giving more money to the neediest students,” said John Curl, director of financial aid. “In-state students would be receiving funds which would be more than their tuition charges right now.”
Through the College Cost Reduction and Access Act, which Sen. Edward Kennedy, D-Mass., said is the biggest increase in student aid since the GI Bill following World War II, the maximum Pell Grant would rise from $4,310 to $5,400 in the next five years. Students receiving Pell Grants would see an immediate increase of $490 in the first year.
“The increase will be marginal, but it will make a difference for students,” Curl said.
During the 2006-2007 school year, 5,300 U students received Pell Grant awards, and more than five million were awarded nationwide.
The act will also cut interest rates on government loans for undergraduate students from 6.8 percent to 3.4 percent by 2011, and CAP loan payments so students won’t have to pay more than 15 percent of their monthly income.
A loan-forgiveness program will be implemented for borrowers who work more than 10 years in public service, such as public school teachers, social workers or nurses.
More than $500 million will be given to minority schools, such as historically black colleges and universities and Hispanic-serving institutions.
“Low-income and middle class students will benefit the most because it increases need-based grants and gives borrowers more rights, and makes paying back easier,” said Pedro de la Torre III, a manager for Campus Progress, an activist organization in the Center for American Progress supporting the legislation.
The funding increase will come from federal money previously given to banks that acted as student lenders.
Kennedy and Rep. George Miller, D-Cal., sponsored the reconciliation bill, which must now be signed by President George Bush to become law. Bush is expected to sign the bill.
Some Republicans criticized the bill for not including measures to stop improper lending practices and because it did not include proposed revisions to the FAFSA form, which they said was confusing.
Sen. Mike Enzi, R-Wyo., a member of the education panel, told The Washington Post the bill “is only a Band-Aid solution without the important bipartisan reforms.”
On the Senate floor, Kennedy praised the act’s efforts. “Our Senate bill provided all these benefits at no cost to the taxpayer — by cutting the outrageous subsidies the government gives to lenders. We gave that money to students, where it belongs,” Kennedy said.