Federal student financial aid programs could be drastically
affected if proposed changes to the Higher Education Act are
approved.
The Higher Education Act is the principal piece of federal
legislation dealing with university education in the U.S.
Established in 1965, the act is designed to expire every five to
seven years; Congress must reauthorize and, in the process, amend
it periodically.
There are many proposals for changes to the act, including loan
interest rate increases, loan consolidation adjustments, the
offering of Pell Grants year-round, and new programs aimed at
better serving students with financial need.
But despite several beneficial measures under consideration in
both the House and Senate, the proposed changes will do more harm
than good, said Jasmine Harris, legislative director of the United
States Student Association.
HEA came up for reauthorization in 2003, but actual approval of
the measures has become bogged down in Congress, and there have
been several extensions of the process due to disagreements over
some policies.
A major part of HEA governs the administration of federal
student aid programs, such as Pell Grants and student loans.
Several measures have been proposed to change these aid programs in
various ways.
If approved, the changes could cost aid recipients up to $5,800
more during loan repayment, Harris said.
One of the proposed changes increases the interest rate cap on
student loans from 6.8 percent to 8.25 percent. Current interest
rates for similar loans outside of the federal aid programs are
close to 5.3 percent, Harris said.
Another revision of the House bill would eliminate
students’ ability to consolidate their student loans while
they are in school, an option that currently enables students to
save hundreds of dollars during their repayment, Harris said.
The bill would also end incentives, such as lower interest
rates, for students who make their loan payments on time.
But, Harris said, there are some positive proposals as well.
The House bill would allow for year-round Pell Grants for
students attending school. Currently, aid recipients who choose to
attend summer sessions are unable to obtain federal aid for those
terms.
The Senate bill would establish a new program that could allow
students who still have unmet financial need after receiving their
federal aid package to receive additional federal aid.
Although there have been significant delays in reauthorizing the
bill, many organizations feel there is much still left to be
done.
“This bill does not achieve the mission of HEA
reauthorization, which is to expand access to higher
education,” Harris said.
USSA has a number of additional measures it would like to see
included in the reauthorized HEA.
Every student-loan recipient is liable to have up to 4 percent
of his or her loan amount withheld as an “origination
fee.” While this amount is deducted from the total loan, the
student must still repay the amount, with interest, during the loan
repayment.
Origination fees were introduced in the 1980s as a temporary
measure to help reduce the federal deficit. Harris says the repeal
of the measure is long overdue.
USSA also wants the government to expand loan forgiveness
opportunities, Harris said.
Loan forgiveness is available to graduates who pursue careers in
certain industries, such as mathematics, science, special education
and nursing. USSA favors the expansion of this list to include
other areas, such as those in the nonprofit sector.
Jeannie Biniek, external vice president of the Undergraduate
Students Association Council, said it would be unwise of Congress
to rush to approve the measures.
“(Congress should) wait until there can be more discussion
of the issues involved,” she said.
Harris agreed, saying more work is needed to truly address
students’ needs.
“Especially since (University of California) student fees
have increased recently, its more important to have supportive
financial aid programs,” Biniek said, adding that
“right now, (Congress) should be making higher education more
affordable.”