With Student Aid Bill, Common Sense, Please!

I applaud the House of Representatives for passing last week the Student Aid and Fiscal Responsibility Act (SAFRA). [1] The bill will increase the annual Pell Grant maximum to $5,500 in 2010 and adjust it to inflation over time. SAFRA also commits to invest $40 billion in the program, allowing for hundreds of thousands more students to receive the Pell Grant, attend college, and gain the opportunities tied with a degree.

The bill now moves to the Senate for a much tougher fight –but before any action, Senators must understand the following points:

This added investment in the Pell Grant is long overdue and desperately needed. Education is the foundation for any competitive economy; and the U.S., once a worldwide leader in education, is quickly falling behind other industrialized nations in important education indicators. The U.S. now ranks tenth among industrialized nations in the percentage of 25-34 year olds with an associate’s degree or higher. [2] The OECD also ranks the U.S. near the bottom of industrialized nations in the percentage of entering students that complete a degree program. Or to put it more simply, one in five American students pursuing a bachelor’s degree never finish. [3]

Why does the U.S. underperform when it comes to education? Because college has become increasingly unaffordable for some of our nation’s brightest students. Since 2000, tuition adjusted for inflation has increased nearly 30 percent [4] –but this is only an average. Meanwhile, it is estimated that between 1.4 million and 2.4 million bachelor’s degrees would be lost this decade among college-qualified high school graduates as a result of financial barriers [5].

The Pell Grant program, created in 1972, was originally intended to cover most of the costs of college. In 1977, the maximum Pell Grant covered 77% of total public college costs. Now, unfortunately, this number has dropped to 32%. [6] That is why SAFRA's additional funding is needed to restore the Pell Grant’s purchasing power to what it once was.

Many Republicans, however, oppose investing in Pell Grants. [7] Among them, committee member Rep. John Kline, R-Minn., warned that as more students attend school because of the economic downturn and qualify for financial aid, the price tag for Pell Grants will be higher than expected, causing the deficit to increase.

Rep. Kline’s position is both sad and ironic. Aiding students is exactly what Pell Grants are intended to do, particularly in tough times. Already over 6 million students rely on Pell, and with falling incomes and skyrocketing tuition, the number eligible will only increase. With regards to claims about the budget deficit, the CBO actually estimates that SAFRA will reduce the deficit by $10 billion dollars from the money saved by ending wasteful bank subsidies under the Federal Family Education Loan program. This aspect of the student aid bill is explained more fully here. [8]

House Republicans proposed an amendment in a last-ditch attempt to save their friends of the private student loan industry. The amendment [9], deceivingly titled “Extension of Ensuring Continued Access and Student Loans Act” would have undercut practically all of SAFRA’s improvements, with the government offering yet another big money giveaway to lenders.

Watch for these antics to unfold in the Senate the coming weeks, as Republicans and even some Democrats look to gut SAFRA and ignore logic. But I say, let common sense prevail: End wasteful lender subsidies and help our students.