Billed as the largest single investment in higher education since the , final legislation passed by Congress this month would increase grants to needy college students, slash subsidies to lenders, and establish a program of forgiving loans to future teachers who stay in the profession.
The Bush administration had objected to an earlier House version of the and threatened a veto, but Secretary of Education Margaret Spellings recommended that President Bush sign the bill, according to her spokeswoman, Samara Yudof.
The bill, crafted in a conference committee early this month, was still awaiting the president鈥檚 signature as of late last week.
The boost in aid would gradually push the annual maximum from $4,050 to $5,400 over the next five years and cut interest payments on need-based student loans in half, to 3.4 percent, over the next four years. That would save the average student borrower $4,400 over the life of a loan of $13,800, according to the House Education and Labor Committee. More than 5 million students receive Pell Grants, and about 6.8 million students take out need-based loans, according to committee figures.
The bill would also authorize $1.32 billion in challenge grants over the next two years to encourage states and philanthropies to help defray college costs.
鈥淭oday with this bill we鈥檙e sending a message, and that message is that no qualified student will be denied a college education because of cost,鈥� Sen. Edward M. Kennedy, D-Mass., the chairman of the Senate Health, Education, Labor, and Pensions Committee, said in a Sept. 7 statement. 鈥淛ust as the GI bill half a century ago, this bill increases access to higher education for millions of Americans.鈥�
Loan Forgiveness
Education students stand to benefit especially from the bill. It contains provisions that would help forgive loans for future teachers and other public servants who stay in their professions for at least 10 years, and that would create tuition grants of up to $4,000 a year for high-achieving students who committed to teaching in high-need subjects such as such as mathematics, science, or special education in hard-to-staff schools for four years.
Covering 鈥渦pfront costs [is] always essential鈥� for education students, said Jennifer Luciano, a lobbyist for the American Federation of Teachers in Washington. In combination with the bill鈥檚 loan-forgiveness provision, she added, 鈥淚 think we鈥檙e getting at both ends鈥� of teachers鈥� financial squeeze.
The bill鈥檚 total cost鈥攔oughly $20 billion鈥攚ould come out of the subsidies Congress has in the past provided to college lenders. In addition, the bill would authorize the government to auction off the right to offer federally guaranteed loans. Only lenders with the two lowest bids in each state would be able to offer educational loans to parents.
The college-loan industry has been under a cloud since last spring, when investigations by New York state Attorney General Andrew M. Cuomo and others documented conflicts of interest between lenders and colleges, including gifts to financial-aid officials from loan providers hoping to be listed as preferred lenders.
Although the final bill was approved with strong support鈥�79-12 in the Senate and 292-97 in the House鈥攏ot everyone celebrated the conference compromise鈥檚 passage.
鈥淭he conference agreement includes a significant investment in the Pell Grant program, which will truly benefit students,鈥� Rep. Howard P. 鈥淏uck鈥� McKeon, R-Calif., the senior Republican on the House education committee, said in a statement. 鈥淚t is unfortunate that this investment falls short of its full potential, and that Democrats missed the opportunity to enact positive, bipartisan legislation that would have made fiscally responsible reforms focused fully on today鈥檚 college students.鈥�
