When searching for loans for school, many students look to private lenders. But a proposal before the U.S. Senate could make the federal government students’ first option. The proposal would dramatically reorganize the way the federal government finances student loans. It would significantly expand a federal direct-lending program while ending subsidies for private lenders. The bill has been tied to the health care reconciliation bill after it appeared that it wouldn’t have the votes to make it through the Senate on its own. But regardless of how the bill becomes law, Congress must secure the future of the nation’s students by passing this legislation.
The bill to overhaul student loans is a version of the Student Aid and Fiscal Responsibility Act, which was passed the U.S. House of Representatives in September. It will end federal payments to private lenders and replace these subsidies with a government-run lending service called the Federal Direct Student Loan Program. It will also increase the individual Pell Grant cap to $5,550 for the coming academic year. Private student loan companies and banks have protested the plan.
It’s imperative that the government act to make education more affordable and accessible. As tuition is increased nationwide — it rose by 5.6 percent last year alone here at the University — a college education is becoming increasingly out of range for those hit hard by the struggling economy. But increased higher education is essential to the sustainability of a healthy economy. And though private lending companies won’t benefit from the bill, the importance of students’ access to higher education should be paramount to the interest of middlemen.
The federal government should do everything possible to make sure students receive as much money as possible. This bill would increase the amount of money available to students by cutting out the middleman. The overhaul would send money straight to students rather than having it stall in private lending programs. And the bill would funnel more money directly to loans and Pell Grants — money that an increasing number of students need to counter rising tuition.
The bill has been packaged with the health care reconciliation bill in response to Senate Democrats’ concerns that they wouldn’t be able to overcome a filibuster on the health care package. And the financial aid bill to itself faced some challenges from senators from states that are home to lending companies, according to a Mar. 11 report by The New York Times. Democrats hope that tying the bills together may secure the votes needed to pass both.
But it’s not so important how the bill gets passed — just that it does. Senators who object to the bill should recognize that the importance of education is more important than the well-being of private lenders. And if the Senate can’t make this legislation a reality as part of the health care reconciliation bill, it must take action to make it law under its own name.
Senators should place the importance of education above their individual interests. Education is vital to economic recovery, and senators should ensure that the financial aid bill becomes law.