$40 Billion Expansion of Federal Aid to College Students Moves Step Closer to Law

By The Editors

The maximum annual Pell Grant scholarship would increase to $5,550 in 2010 and to $6,900 by 2019 — from $5,350 now — under legislation passed today by the House of Representatives. The measure now moves on to the Senate, where it is also expected to win passage.

In an article on The Times’s Web site, Tamar Lewin writes that “starting in 2011, the amount of the scholarship will be linked to the cost of living, rising along with the Consumer Price Index, plus 1 percent.” All told, the legislation would add $40 billion to the Pell grant program.

Ms. Lewin writes that the bill “expands federal aid to college students while ending federal subsidies to private lenders.”

By shifting to direct federal lending, the Obama administration said it will save more than $80 billion over 10 years, which will go into higher Pell Grants for low-income students, new investments in community colleges, early-childhood programs and other education efforts.

The author of the bill, Representative George Miller, Democrat of California and chairman of the House Education and Labor Committee is quoted as saying:

“This legislation provides students and families with the single largest investment in federal student aid ever. Today the House made a clear choice to stop funneling vital taxpayer dollars through board rooms and start sending them directly to dorm rooms.”

How might this legislation impact parents and students? Let us know by using the comment box below.

Comments are no longer being accepted.

Etaoin September 17, 2009 · 4:40 pm

This sounds great but is something missing? Where is the money for middle-class kids, who previously went into debt with private loans? Lots of other things addressed here, all good, but something is missing. Also, federal loans have been very strict on parents’ credit history? What happens now?

Jay September 17, 2009 · 4:42 pm

Awesome! It’s due time.

joe September 17, 2009 · 4:44 pm

See, Republicans want to keep everybody as stupid as possible. They’re afraid if we all go to college, there won’t be anybody left that they can talk to.

Saladina September 17, 2009 · 4:52 pm

Yet another big spending program.

Joe M September 17, 2009 · 5:00 pm

More Socialism! What were they thinking? Giving kids cheaper loans that they can pay off sooner saving billions of dollars. Letting more kids go to elitist colleges. Next thing you know they’ll be voting Democratic and then we’re really in trouble. Education is the great enemy of the present day GOP! Just look at the “Tea Parties” upstanding Americans screaming about health care, spending and you name it. We lose “mob” mentality and “us versus them” and we turn into, God forbid, Canada!

Tree September 17, 2009 · 5:00 pm

This is great news and well overdue.

Wonks Anonymous September 17, 2009 · 5:00 pm

The money for the middle class kids comes directly from the government which loans the money and services the loan. The government collects the interest and makes the profits.

With the same amount of spending more money is available to students because we no longer support bankers profits.

Really it is a simple idea. If it is cheaper for the government to do something directly then the government should do it directly. Now if we could only apply this idea to health insurance.

liberal dem September 17, 2009 · 5:02 pm

Here we go. More fuel to add to the Tea Party’s fire. No one is reporting the whole truth about student lenders. Banks don’t make much profit – if at all – off federal student loans. The ‘subsidies’ are just the gov’t guaranteeing the loans, meaning if students default, the gov’t pays the bank a certain amount (but not the whole amount). The benefits of banks lending the money is because they have the capital available – and all the gov’t has is our taxpayer money and a bunch of IOUs. The Pell Grant increase is good for the poor, but doesn’t benefit the middle class at all.

I’m a huge Obama supporter and a life-long Democrat, but this vote really freaks me out.

bob parno September 17, 2009 · 5:04 pm

Hallelujiah, there is wisdom still in this land.

Pierre September 17, 2009 · 5:08 pm

Congratulations America.

Liz September 17, 2009 · 5:10 pm

@Etaoin – the direct lending is what is supposed to help middle class kids, whose ability to obtain affordable student loans was especially jeopardized as private lenders implemented programs that could be construed as predatory and as the economy soured this past year. The article directly addresses this issue: “Two-thirds of American students borrow money to pay for their college education, and last fall’s market turmoil made their prospects uncertain. “The No. 1 reason we entered the whole review of the student loan situation was reliability, to make sure that loans will be available regardless of the credit markets,” said Robert Shireman, the deputy undersecretary of education. “We came very close to a tough situation last year.”” As for your second question, while the article does not address it directly, the article does mention that the FAFSA will be streamlined, a news I believe parents will wholeheartedly embrace.

This overhaul is a long overdue step in the right direction.

calyban September 17, 2009 · 5:15 pm

The Republican solution to student loans: huge subsidies and windfall profits to the banks.

The Republican solution to health care reform: huge subsidies and windfall profits to private insurance companies.

The Republican solution to military expenditures: outsource military functions to private corporations who get huge subsidies and windfall profits!

Am I starting to see a pattern here?

toughen up September 17, 2009 · 5:17 pm

You know what other simple measure can save billions. When applying for financial aid why did I need to supply my taxes etc… Why can’t the IRS simply talk to the Dept of Education.

rbl September 17, 2009 · 5:19 pm

Now, when will they reform the FAFSA so that financially independent students under the age of 24 can file for financial aid? I’m financing my college education out of pocket and with private loans, because I’m unable to file without my parents’ tax forms. The assumption that parents are able or even willing to financially assist their children after the age of eighteen is no longer relevant to many already broken families. Even some outside scholarships demand to see the FAFSA, as a way of ensuring their funds are going to needy candidates.

The students most in need of assistance, who are doing this without supportive adults, are the ones being overlooked by the current financial aid system.

Stella H. September 17, 2009 · 5:22 pm

thank you “wonks anonymous!” exactly!

we need to realize government is meant to serve us, it is not evil, like the right wing says.
YAY for this bill!

mercedes September 17, 2009 · 5:22 pm

It’s sort of ironic that all this borrowing is going to contract our economy and erode the dollar and our ability to purchase imports which will lead to less work for these kids to do. Well, we’ve got to stick them somewhere for four years. We definitely don’t have enough people in America with communications degrees and MBA’s.

Owens September 17, 2009 · 5:26 pm

I support providing loans for education, we need to improve the level of education in this country and the payback is tremendous. However, I do have a beef and that is that congress should also pass legislation that toughens the requirements to repay the loans. Too many students graduate from school, get a good paying job and never think twice about repaying the loan — so congress, do something about this while you are making it easier to loan more of our tax dollars!!!

calyban September 17, 2009 · 5:26 pm

The Republicans shot themselves in the foot again. Every single college student and graduate with a student loan knows that the banks were simply ripping them off. The horror stories are legion.

All those young voters also know (or will know when the Democratic media machine gets into gear) that the Republicans protected and encouraged the banks to rip them off AND wouldn’t even allow discharge in bankruptcy. The price of Republican venality could well be political oblivion for at least a generation, and richly deserved!

Afshin Shobair September 17, 2009 · 5:30 pm

If private lenders making the students loans today are as innovative and competitive as their supporters lead us to believe, then they will have no problem continuing to issue student loans and do not need government subsidies to stay in business.
It is about time we take out the well-connected middle men and get the money directly to those it was meant to help.

Francis E. Dyer September 17, 2009 · 5:31 pm

Shifting to direct federal lending is obviously the right thing to do. Now, what’s needed is raising the standards for instructors in community colleges. That also means eliminating high school courses in community colleges and returning to P G courses in high schools, where they belong.

Frank S September 17, 2009 · 5:31 pm

Yeahhhhhh!!!!!!!!!!!! Common sense finally wins out!

lpt September 17, 2009 · 5:31 pm

What’s 30K jobs versus hundreds of thousands of well educated people out in the work force?! We need to stop short selling our nation’s future.

MPCT September 17, 2009 · 5:35 pm

How are we paying for this? When will student loan defaults be the next crisis (and of course bailout)? Two Americas – the one that pays taxes and the one that lives off them.

JFA Dallas, TX September 17, 2009 · 5:38 pm

Good, get the rip-off banks and Party Of No out of the picture. Gear up the Pell greants and other lower cost options for students so that they can get an education.

andrew September 17, 2009 · 5:40 pm

Just look at those vicious republican no votes. I guess their thinking is that if Daddy doesn’t have enough money to write the checks, then students should be fair game for the banks which, by the way, should be protected and subsidized for such poor quality borrowers.
Mindboggling.