Senate acts to increase Pell aid

Congress is set to reform federal student aid by increasing the maximum amount of federal grants.

On Friday, the Senate passed legislation, similar to a bill passed in the House earlier in the week, to raise the maximum Pell grant to $5,100 by next year and $5,400 by 2011 and create a stipend category called Promise Grants that bridges the gap between federal funding and a family’s contributions for students who demonstrate the most need.

Pell grants are money for students who demonstrate financial need and do not have to be repaid.

To afford to the changes, the bill removes $18 billion in taxpayer subsidies to government sponsored student lenders such as Citibank and Sallie Mae. The subsidies are given to banks to ensure a profit for being in the student loan business.

Budget rules dictate that $700 million of the savings must go toward reducing the federal deficit, but lawmakers said the rest would be used to increase student aid.

“This legislation does not cost the taxpayer. It saves the taxpayer because we are taking the money from the banks and providing it for the … students themselves,” said Sen. Edward Kennedy, D-Mass., chairman of the Senate Committee on Health, Education, Labor and Pensions.

“Funding for the (Pell grants) has remained stagnant for the last five years,” said Rebecca Thompson, legislative director for the United States Student Association. “We are extremely excited … (we’re) finally seeing an investment in students.”

The proposal will also make it easier to apply for federal student aid, and will turn the Free Application for Federal Student Aid into a two-page application.

“The FAFSA is extremely complicated and hard to navigate,” Thompson said.

Thompson, who sits on the FAFSA design committee, said she works with officials from the Department of Education to redesign the application to make it more accessible to students, including many who are the first in their family to attend college and have few resources available during the application process.

The House’s version of the bill, which the White House expressed objection over, does not mention the application simplification, but reduces interest rates on federally-backed loans from 6.8 percent to 3.4 percent for low and middle-class students, which the Senate bill does not call for.

Both bills include a cap on annual payments on student loans of 15 percent of a graduate’s income and provide for complete debt forgiveness after 10 years of making payments for students who go into public service professions.

The White House released a statement after the House bill was passed, suggesting President Bush would veto the version if passed by the Senate, because the programs and policies are “poorly designed” and would result in “significant long-term costs,” but that he would work with Congress to ensure affordable access to higher education.

Since the two bills are different, a House-Senate conference committee will meet and lawmakers will reconcile the two pieces of legislation.

Thompson said students should contact their representatives to ensure that the bill that comes out of the conference committee offers the most grant aid possible.

“We need to ensure that there are provisions that are passed in the best interests of the students,” she said. “Through politics of Congress … we tend to lose a lot of things.”

Gregory Cendana, a member of the board of directors for the United States Students Association, said lawmakers are “taking steps in the right direction,” but added that increased funding is necessary for additional federal programs that provide matching money to state programs, such as CalGrant.

“I think this is really important, especially for working class students, to make college more affordable,” he said.

“The principle here is if you go to college and take out a reasonable amount of federal loans, you should be able to pursue your goals and career and life without having that debt drive your actions,” Luke Swarthout, a higher education associate for U.S. PIRG, which lobbies for student aid, told the Associated Press.

With reports from Bruin wire services.

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