The Student Aid and Fiscal Responsibility Act (SAFRA), which was passed by the House of Representatives on September 17, plans to change how future college students pay for college and the amount of money its new polices will save the country’s budget.
“The bill will help restore America's global leadership in higher education, paving the way for a stronger economy,” the U.S. Secretary of Education Arne Duncan said in a written statement. “The bill ensures that more students who are willing to take responsibility for their education can go to college and earn a degree.”
The number of degrees and certificates awarded in the United States has been on the decline as the U.S. now ranks 15 among a list of 29 other developed countries, according to an international economic organization called Organisation For Economic Co-Operation.
There are multiple facets to this financial aid legislation, which is considered to be the “single largest investment in federal student aid ever,” Representative George Miller (D-Calif.) said in a written statement reported by a NY Times on September 18. “Today the House made a clear choice to stop funneling vital taxpayer dollars through boardrooms and start sending them directly to dorm rooms.”
A critical aspect of the SAFRA states that it will end direct lending by loan companies. When the money for a student loan is sent directly from the government, the banks cannot receive additional funds through acting as middlemen in the transaction. This program will begin on July 1, 2010 and will save more than $80 billion over 10 years, according to the Obama administration.
“The direct loan program, however, takes that bank out of the picture,” said Amanda Kishbaugh, Assistant Director of Financial Aid at Bloomsburg University. “What it means is that the school and the federal government are working right together, no bank information in between.”
Currently, the university does not participate in direct lending and it has a list of lenders that participate in the Stafford Program. According to Kishbaugh, students can go out and choose any lender they wish and would go through that lender to get their Stafford loan; the money then comes directly to the school.
The bill will also increase future funds for Pell Grants, which provide aid to students of low-income families, thus making higher education available for more people in the country. SAFRA ensures that the grant offers more money each year and that it will be more reliable for students and their families as well.
In addition, the SAFRA promises that it will make filing the Free Application For Federal Student Aid (FAFSA) an easier procedure for applicants: removing unnecessary questions and allowing the partial use of family tax return information.
“Trying to improve FAFSA, trying to streamline that, they talk about that quite a bit,” Kishbaugh said. “The last time they were trying to simplify the FAFSA form they actually added questions to it, so when they say ‘simplify’ or ‘streamline’ it doesn’t necessarily mean fewer questions, it just means maybe to clarify questions.”
The bill will not cause structural changes in the process college students receive loans or grants to pay for their education.
“It’s not necessarily going to make it any different for the student on your end,” Kishbaugh said, “You are still going to get your money, your still going to get the same amount of money, it’s just a different process for the Financial Aid offices to get the loans processed.”
To read the bill in its entirety, go to the U.S. Department Committee for Education and Labor site at http://edlabor.house.gov/.
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