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Congress should revamp student loan program
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share thisCongress faces some daunting economic issues but it also has a chance to act quickly on a home run for taxpayers and consumers.
The House, in fact, already has passed the Student Aid and Fiscal Responsibility Act. It is historic legislation that will convert student loans from a giant, no-risk cash cow for private lenders into an efficient way to help more families finance college educations - all at no cost to taxpayers.
Basically, the bill would save $87 billion over 10 years by eliminating private lenders as middle-men for federally backed student loans. Those savings would be rolled back into loan and grant programs in order to help reduce college costs for students.
About $40 billion would ensure annual increases for Pell Grants, which go to students from families with incomes of less than $50,000.
Another $10 billion would go to help more students enter community colleges.
It is vital for the government to help students more so than the financial industry. The Project on Student Debt recently reported that two-thirds of the college class of 2008 graduated with loan debt averaging a record $23,200. The report also found that college graduates between 20 and 24 had an unemployment rate of 10.6 percent in the third quarter of this year, making that record debt an even greater burden.
Average debt carried by students in Pennsylvania, $25,219, was well above the national average and the seventh highest average in the country. The percentage of Pennsylvania students carrying debt, 71 percent, was the fifth highest in the country.
On Penn State's main campus, for example, 69 percent of 2008 graduates carried student debt, and the average amount was $26,800.
Lackawanna College was not included and no figures were available for Keystone College.
The Senate has not acted on the student loan bill because it has been preoccupied with the debate on health care reform.
Private lenders have opposed the badly needed reforms on grounds that they could cost jobs. Yet those companies would be continue to service loans. The difference is that they would not be paid, as they are now, as if they were taking on the risk for the loans.
Sens. Bob Casey and Arlen Specter should support these reforms. Mr. Casey, especially, could play a vital role as a member of the Health, Education, Labor and Pension Committee.
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