House proposes changes in aid
By Sabrina Kwon
A House of Representatives subcommittee is currently considering changes to the Higher Education Act that could greatly expand Pell Grants and change several other aspects of federal financial aid. If enacted, the draft legislation, released by the House Subcommittee on Post-Secondary Education last week, would:
1/3 gradually eliminate banks from the student loan process,
1/3 nearly double the maximum and minimum sizes of Pell Grants and
1/3 eliminate institutional accreditation as a necessary qualification for financial aid.
The most controversial feature of the proposed bill is the Direct Loan Program, in which students would get money directly from the federal government. This would cut banking middlemen out of the student loan picture, saving the government an estimated $900 million the first year of the change.
These savings would come from the elimination of interest subsidies to banks and administrative allowances to guarantee-agencies that the government currently shells out as part of the Stafford program. Bankers and guarantee-agency officials argue that this direct lending program would cost the government more money because of the high expense of reprogramming computer systems and retraining loan personnel.
MIT Associate Director of Student Financial Aid Stanley G. Hudson commented that the proposed plan would be more efficient than the existing Stafford Loan program. He attributed this efficiency to the bill's planned replacement of the many loan sources now available -- a combination of banks and individual institutions -- with a single supplier, the federal government. Hudson questioned whether the government had enough capital to support such an overhaul. "Whether or not the capital is available will affect the ultimate passage of the provision," Hudson said.
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may be broken
Another controversial aspect of the bill is the subcommittee's proposal to break the long-standing link between accreditation and an institution's eligibility for federal financial aid. If the accrediting agencies were dismantled, as the bill proposes, state agencies would receive federal funding to compensate for the additional administration of universities that would become necessary. The bill also stipulates that the Department of Education regularly visit and re-evaluate the 9000 institutions which receive aid.
Staff Director of the House's Post-Secondary Education Panel Thomas R. Wolanin commented last week that he agreed with the bill's proposal to eliminate accrediting agencies because of their reluctance to examine the "financial stability and administrative capabilities" of various institutions. Administrators of accrediting agencies and college officials are upset over this particular proposal, however. They claim that the bill, if enacted, could stifle the nation's voluntary accreditation system. Executive Director of the Commission on Colleges of the Southern Association of Colleges and Schools James T. Rogers whew!said that state governments, if given more power to control accreditation standards, might allow political interests to limit academic freedoms on campuses.
could be doubled
Pell Grants are another facet of the Higher Education Act which the bill proposes to change. The panel hopes to raise the minimum grant to $400 from $200, and the maximum grant to $4500 from $2400. Furthermore, the plan would raise the income level for Pell Grant eligibility to $44,000 from the current $35,000.
The panel also proposes to simplify the current complicated financial aid procedure by eliminating companies, including the College Board, from the process, instead furnishing students with a free federal application. This application would also smooth the financial aid process for low-income families by requiring only that they sign a statement saying their income falls below a certain level. Those institutions that want to obtain more financial information from students could have an additional form for students to fill out.
The Senate Subcommittee on Education, Arts and the Humanities is also working on a reauthorization bill similar to that of the House. The Senate bill is scheduled to be released sometime this month. If both bills are passed, lawmakers intend to join the key points of the two in a single bill, to be sent to the White House soon after the new year.
The idea behind the bills is to change the current balance between grants and loans, according to Brian Quinn, a spokesperson for Senator Edward M. Kennedy (D-Mass.). Quinn said that "only about 30 percent of financial aid is in the form of grants and 70 percent is in loans . . . the pending bill would bring the system closer back to the way it was [with 30 percent loans and 70 percent grants]."
According to Quinn, the proposed plan would focus more on helping out middle-class families who are not eligible for financial aid under current federal regulations. "There is no reason we should impoverish families by forcing them to triple mortgage their homes and trade away their lives in order to send their kids to college," he said. Quinn also commented that the system should give siblings in college more weight than it currently does.
If passed, the proposed bills would go into effect in the 1994-95 academic year. The Bursar's Office, however, is unsure if that is a realistic date because of all the legislative work involved. "It is too premature to tell when students will feel the effects of this bill," commented Associate Bursar Kate Wilson. "But the bill will certainly have significant effects on financial aid if it does go through," added Bursar Shirley M. Picardi.
Hudson, however, is unsure about the effects the bill will ultimately have on this country's financial aid system. "The final, reconciled bill will probably be very different from these proposals" after it goes through the law-making, Hudson said.