New law changes Pell Grants and private lending for college students
Students will see increases in maximum Pell Grants because of education reform legislation tied to the massive health care overhaul passed by Congress on March 22 and then signed into law by President Barack Obama.
By William ChamberlinThe Guardsman
Students will see increases in maximum Pell Grants because of education reform legislation tied to the massive health care overhaul passed by Congress on March 22 and then signed into law by President Barack Obama.
While the victory is significant, an earlier bill passed by the House last September would have seen the maximum Pell Grant, designed to assist students with little or no income, raised yearly to $6,900 by 2020.
The education reform legislation was attached to the health care bill to pass it under a process known as reconciliation. During this process, cuts to the original education bill were negotiated.
Now Pell Grants will rise to $5,550 for 2010-2011 and only climb up to $5,975 by 2017.
“My daughter and I are not going to reap the benefits of what Obama intended,” said City College student Helen Ferencevich, an administrative justice major and single mother.
The reform bill eliminates subsidies to private lenders by setting up direct lending between the federal government and college students. The Congressional Budget Office claims the direct lending approach would save over $61 billion over 10 years, with $36 billion of the savings to support Pell Grant funding.
“Anything that gives extra dollars to students is a victory,” said Jorge Bell, City College dean of financial aid. “Whatever we can do to help students is what makes sense.”
America’s Student Loan Providers, a group representing private lenders, said this is not the final chapter, reported CBS news. The group said the landmark health care bill could be passed without eliminating thousands of jobs and critical student services.
Sallie Mae, one of the nations largest loan providers which lobbied heavily against the bill, said it will have to cut its work force by 2,500 employees, according to a Fox News report. Sallie Mae called the student loan reform a “government takeover” just weeks before it was passed.
On March 18, congressional Democrats also reduced significant funding to community colleges.
Originally, community colleges were supposed to receive $10 billion for students’ needs and various construction projects. After the revisions to the bill, however, they are now due to only receive $2 billion.
Bell said a lot of the changes to direct lending will rest upon the financial aid staff. City College students will not experience much change next year.
“A lot of the money that was going to pay the money lenders is now going to go back into Pell Grants,” Bell said.
He said the transition for City College students will be very smooth. Financial aid staff at City College are already learning the new procedures, computing and getting educated on the differences that directly involve their office.
“It is a shame the bill didn’t remain how it was originally intended, it is a defeat for me,” Ferencevich said.
