Federal Battle Puts Student Aid Changes in Limbo
New federal laws may have an impact on financial aid packages in the coming years. Over the summer Congress passed the College Cost Reduction Act in an effort to assist U.S. college students. Certain parts of the bill have drawn criticism from congressional Republicans and prompted the threat of a presidential veto.
The bill includes numerous provisions ranging from increasing Pell Grants –– money given to low-income students –– to upping maximum borrow amounts for fixed-rate federal loans and increasing debt forgiveness for those who go into careers deemed of national interest, such as nursing, library science and foreign languages.
The act puts more emphasis than does the Bush budget on lowering the interest rates of federally-subsidized Stafford student loans, approving a 50 percent decrease over the next five years. The bill also creates new grants directed toward first generation college students and students from underrepresented ethnic groups, specifically Hispanics and Native Americans.
The White House argues both provisions will add too much cost to aid programs and, with the size of the national debt, will take money away from those with the greatest need.
Supporters of the bill say this is not the case. According to a pamphlet prepared by the House Education and Labor Committee, the new programs will not create a larger burden for taxpayers. Rather, the bill includes cuts in government subsidies to loan companies that hold the debts of college graduates.
Another provision calls for investigations into colleges that have large increases in their tuition, a response to high profile tuition increases at both public and private institutions in the past few years. The administration calls this too far-flung and idealistic.
As of Friday morning, the White House had not announced a decision as to whether it would veto the bill.