April 16, 2008

White House Backs House Student-Loan Bill, With Reservations

Washington — The White House supports student-loan legislation that the U.S. House of Representatives will vote on tomorrow, but shares for-profit colleges’ concerns that raising federal loan limits could cause some institutions to lose their eligibility to award student aid, the Bush administration said in a statement released late today.

The statement, which is the administration’s official policy on the bill, HR 5715, says President Bush backs provisions that would allow the Education Department to purchase loans from cash-strapped lenders and to designate lenders of last resort on an institution-wide basis, rather than a student-by-student basis.

But the president asks that the education secretary’s authority to designate lenders of last resort be “temporary” and says he fears that raising loan limits, as the bill proposes, would cause some institutions to run afoul of the 90-10 rule, which requires that colleges receive at least 10 percent of their revenues from non-federal sources in order to participate in the federal student-aid program. For-profit colleges have long opposed the rule.

The bill passed the House education committee just last week. —Kelly Field

Comments

1. In 1974 the maximum federally guaranteed student loan was $2500. In 2008, the maximum federally guaranteed student loan for freshmen is $3500. A thousand dollar increase in 34 years does not meet the increase in college costs. Federal grant funds have not bridged the gap. Federal aid policy should be decided based on the greater good – which is the needs of the students being served. We should not require students to borrow higher cost private loans because the for-profit sector will be unable to comply with the 90/10 ruling.

   — Dr. Pat    Apr 17, 09:16 AM    #

2. Dr. Pat, you make a very good point. It seems government would rather push students towards private lenders instead of raising FGSL’s limits to ease the burden on student’s who have to raise their own tuition. Wouldn’t it be great if all high school students could afford to attend a college without have to worry about a variable interest rate from private lenders?

   — D Marvez    Apr 17, 10:11 AM    #

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