University Business - April 2007 - (Page 33)

ON THE HILL A Blizzard of Bills Congress takes early action, but upcoming conﬂicts are brewing. By Alan Dessoff RUE TO THEIR WORD, Democratic congressional leaders wasted little time in moving to improve college affordability by increasing Pell Grant awards and slashing interest rates on student loans. Both actions fulfilled promises they made during last year’s campaigns. The first was easy. The second is not yet a signed and sealed deal, and competing higher education and business interests, not to mention frequently opposing Democratic and Republican viewpoints, leave little assurance as the new Congress moves through its first session. The only thing assured so far is a $260 increase in the maximum Pell Grant, from $4,050 to $4,310, which was included in the final continuing resolution for the fiscal year 2007 budget that President George W. Bush signed in mid-February. The Pell Grant boost was the first since 2003, when it was raised by $50, and it will be effective for eligible students in the 2007-2008 school year. A month earlier—and barely two weeks after its session began—the House passed legislation to cut in half federally subsidized student loan interest rates from the current 6.8 percent to 3.4 percent over the next five years. But the success of that measure, which the House approved by a vote of 356 to 71, is far from being replicated in the Senate; powerful banking interests there have launched a campaign to derail it. KENNEDY TAKES THE LEAD The student loan cut is only one controversial part of the Student Debt Relief T One Senate bill would prohibit lenders from offering gifts worth $10 or more to college employees. Act (S.359), introduced in the upper body by Sen. Edward M. Kennedy (DMass.), chair of the Health, Education, Labor, and Pensions Committee. He says it would save the current typical student borrower $2,280 over the lifetime of his or her loan and save the beginning college student $4,420 when fully phased in. Kennedy’s comprehensive measure also would raise the Pell Grant to $5,100 and cap federal student loan payments at 15 percent of a borrower’s discretionary income, with loans forgiven after 25 years and an option for 10-year loan forgiveness for individuals in public service careers such as teaching, law enforcement, and social work. Further, Kennedy says $13 billion in savings can be generated, at no cost to taxpayers, by reforming the student loan programs to encourage the use of the government’s less expensive Direct Loan (DL) program instead of the Federal Fam- ily Education Loan (FFEL) program in which private banks participate. Four major banking organizations— the American Bankers Association, America’s Community Bankers, Consumer Bankers Association, and Financial Services Roundtable—immediately weighed in with their concerns about Kennedy’s proposal. They noted in a letter to Kennedy that in 1993, Congress rejected replacing the FFEL program with the DL program with the hope that competition between the two programs would benefit students and parents. That indeed has been the result, according to these organizations. But Kennedy’s proposal “appears to us to be an attempt to end the beneficial competition between the two programs,” the banking groups asserted in the letter. They challenged using federal monies to encourage schools to quit the FFEL program in favor of Direct Loans. “As a matter of fiscal policy, we question the soundness of using estimated budget savings that may or may not materialize to make immediate cash awards to schools. We also question using legislation to encourage schools to abandon the program that they believe best serves their students,” the organizations declared. Kennedy countered the bankers’ claims in February at his committee’s first hearing of the year on “Higher Education, Higher Cost, and Higher Debt: Paying for College in the Future.” Citing charts prepared by the Government Accountability Alan Dessoff, a former reporter for The Washington Post, is a Bethesda, Md.-based freelance writer. universitybusiness.com April 2007 | 33 http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - April 2007

Contents
College Index
Company Index
Advisory Board
Editor's Note
Stats Watch
Sense of Place
Viewpoint
Admissions
Independent Outlook
On The Hill
Future Shock
Spellings Lessons
Identity Mangaement
Getting A Bigger Picture
Facility Directors Speak Out
Internet Technology
Working the Web
What's New
Calendar of Events
Direct Connect
End Note

University Business - April 2007