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Ryan budget plan offers new student loan program

By Katie Burke, Daily Staff Reporter
Published March 26, 2012

In a budget plan to be voted on in the U.S. Senate this week, Republican leaders in the House of Representatives proposed the recalculation of federal student loans to increase transparency for taxpayers and decrease national debt.

The plan — introduced by U.S. Rep. Paul Ryan (R–Wisc.) and released last week — outlines a number of budget cuts as part of a method for restructuring the national deficit. Though Ryan’s plan argues that federal loans and subsidies currently in place are not effective in lowering the costs of higher education, University officials are skeptical of both the plan’s implementation and impact.

The proposal suggests a new calculation for providing loans, which eliminates certain avenues of funding and places caps on other areas. Suggested cuts include in-school interest subsidies, Pell Grant eligibility for less-than-half-time students and mandatory Pell Grant funding. Cuts will “force schools to reform and adapt,” according to the plan.

“The decisions of colleges and universities to raise their prices would have been constrained if the federal government had not stepped in so often to subsidize rising tuitions,” the plan states.

Cindy Bank, assistant director of the University’s Government Relations Office in Washington, D.C., argued that the plan has very little chance of passing the Senate, especially since Democrats control the Senate.

“The plan won’t pass in the Senate as it is written (though the University) is concerned about any cuts to financial aid,” Bank said.

Bank said in its current state, the plan would not have an immediate influence on the University, noting that the proposed cuts are more restricting than the Budget Control Act, which was passed in 2011 to reduce national debt.

“(The plan) is written broadly — the specifics haven’t been described,” Bank said. “It sets caps for spending below those set in the Budget Control Act, and we don’t have a sense yet on how those cuts will be applied.”

Bank added that the budget proposal does not consider the expenses of privately provided loans in its restrictions on federal programs.

“The proposal doesn’t take into account the expenses for subsidies when private groups administer loans,” Bank said.

The plan will be debated in the House today, and a vote is scheduled for Thursday. If passed, the cuts will be implemented for the governmental fiscal year, beginning in October 2013.

In an e-mail interview, U.S. Sen. Carl Levin (D–Mich.) said cutting financial aid programs is not an effective way to approach college affordability.

“We need to make college more affordable, not less,” Levin wrote. “Protecting programs that help families send their children to college is vitally important, and I would strongly oppose any of those programs.”


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