Congress Passes Overhaul of Student Aid Programs

[Judi Lynn]

Source: New York T imes

Congress Passes Overhaul of Student Aid Programs


By DIANA JEAN SCHEMO
Published: September 8, 2007

WASHINGTON, Sept. 7 — Congress gave final approval to a broad overhaul of federal student loan programs Friday, sharply cutting subsidies to lenders and increasing grants to needy students.

In quick succession, the Senate and the House approved the changes, allowing Democrats to say they had made good on one of their campaign promises last year, to ease the strain of rising college costs. In the Senate, the bill passed 79 to 12, reflecting broad bipartisan support, while the House approved it 292 to 97 .

The federal education secretary, Margaret Spellings, said she was recommending that President Bush sign the bill because it “answered the president’s call to significantly increase funding” for Pell grants for low-income students. The administration had issued a veto threat against an earlier House version of the legislation.

Republicans in the House expressed disappointment at the administration’s change of course, arguing that the cuts in lender subsidies went too far.


Read more: http://www.nytimes.com/2007/09/08/washington/08loan.html?_r=1&oref=slogin

[frank78]

1. The unfortunate thing is....

That federal funding is possibly the biggest cause for college tuition costs spiraling out of control. Colleges raise tuition rates, knowing many of the students will be getting govt aid to pay for the costs. The schools get the money they expected and repeat with steeper tuition rate increases. What's the answer to stop this circle of tuition-govt aid dependency without hurting prospective students??? Damn, I wish I knew.

The irony is that these appropriations end up helping middle class and upper income students and harming poor students in the long run because of the continual resulting tuition hikes from govt aid. It's called the law of unintended consequences.

[LeftyMom]

2. The main factor is state funding

Here in CA we have relatively affordable state universities with lots of state financial aid, and low to moderate income students get their community college fees waived. Why? Because the state gov't is committed to funding higher ed. They actually lowered the community college fees- only $20 a unit- and enrollment is through the roof at all levels because it is affordable.

[shanti]

18. is that how much it is now

for community college credits? that's awesome! i have a hs senior son who is planning on attending jc next year. of course, i'll be paying for part of it, so it's good to know that the fees are more reasonable now.

(i remember when they were 12 dollars a unit)

[Frances]

3. I don't agree with you

I think tuition will go up just like groceries, rent, etc. whether there are loan programs or not.

Many years ago I had a National Defense Education Act loan. Each year that I taught school, I got a 10% reduction in the loan. The maximum reduction of the loan was 50%.The U.S. invested in my education because my services helped make the country stronger. (That's where the loan got its name.)

[NJCher]

13. How that loan program really got its name

National Defense Education Act ... The U.S. invested in my education because my services helped make the country stronger. (That's where the loan got its name.)

Yeah, well, really how it got its name is that in this militaristic country where our tax dollars are plundered by defense contractors, the only way to get a few cents through for education is to package it in militaristic terms. So that's probably what some group of Dems did and got it through when they couldn't get it through any other way.

National Defense Education Act. Cheebus. This country is so insane. I mean really. Why do we have to cloak something so positive as education in paranoid terms?



Cher

on edit: Here's what the wikipedia says about this act: The NDEA was instituted primarily to stimulate the advancement of education in science, mathematics, and modern foreign languages; but it has also provided aid in other areas, including technical education, area studies, geography, English as a second language, counseling and guidance, school libraries and librarianship, and educational media centers.

Sounds like it started off to keep us competitive with the Russians in the space race and then when legislators discovered how to get funds through in the name of defense...

[Frances]

17. The National OFFENSE Education Act

I could agree with your assessment if the act had been about attacking other countries, but it wasn't. It's true that the impetus was the fact that the Russians put up a satellite way before we did. But it was a fact that the U.S. education system was not producing the scientists that the Russians and others were produced.

The Democratic response was to invest in our own people. Poor children who were good students but would not have had an opportunity to go to college got that chance with the government loans. (There were almost no community colleges then.)

I suppose if the Republicans had been in charge they would have awarded no-bid contracts to Halliburton who would then have outsourced the work to other countries, thus reaping millions for their CEOs while exporting work away from the U.S.

Get a grip, young folks. Franklin Delano Roosevelt, Harry Truman, John Kennedy, Lyndon Johnson, and Bill Clinton invested money in ordinary people. Roosevelt was called a traitor to his class (he was very wealthy) for that very reason.

And by the way, my loan was handled by the government with no giant banks ripping me off.

[Trajan]

5. I am not sure whether this is truth ...

or merely speculation ....

Have you any evidence of this ? ..... Isnt it true that tuitions have been SKYROCKETING the last few years in the face of REDUCED grants ? ....

Funny how that is the exact opposite of your assertion ... Can you explain this incongruity ?

[frank78]

8. grants

Grants, also funded by the govt don't have to be paid back. Federal student aid certainly does.

[tom_paine]

6. Welcome to DU, frank78. Interesting point.

I have often thought that the Healthcare Providers ultimately had the same kind of self-defeating relationship with Insurers, and that was another reason costs had skyrocketed.

but if this is true, how to stop it? It seems to me to be somehow part of human nature to sort of expand into what is there to expand into. That includes tuition expanding to the maximum level that govt. and people can "support" it, as health costs have done.

[frank78]

9. yeah, that's a good point

We do tend to "expand into what there is to expand to," as you put it. Regarding healthcare- we'll get completely off topic here, but let's just say that from some of the speeches I've listened to and some of the facts that I've read, plus being involved in healthcare myself- the problem is not that we don't have enough govt meddling in healthcare, the problem is that the govt has been running healthcare so much for quite some time now. And that's why it has gotten so expensive. The one positive the govt can do would be to force insurers and healthcare facilities to be more upfront about costs, thereby increasing competition. They could also let us reimport drugs from Canada. Anyhow, I could continue, but I'll be getting off topic.

Regarding the tuition thing- I wish I had an answer as to how to mitigate govt's assistance that ends up being what magnifies the increased costs.

[tom_paine]

10. I have to disagree with some of what you're saying

You say that too much government control now is the problem, and yet all statistics show that private insures operate on a margin of something like 11-15% while government-run health programs typically burn operating funds at 2% a year. Same goes for Social Security.

While I do agree that the phenomena you outlined and I elaborated on does happen, I am not sure that the problem can be boiled down simplistically to "the problem is too much government control".

Same with tuition, even IF that phenomena is palying a role, I doubt it is the sole cause.

I also doubt that simply removing government funds or regulations from either of these two industries would have any effect on the upward spiral (which may well have takenm on a life of it's own, or be fueled by the other factors besides govt. $$$$ artificially increasing prices.

I would like to add one more thing: Once, when I had just switched jobs, I had a SNAFU with getting my new insurance card, and so, briefly, I was sent bills that would be sent to an insuranceless person.

After it all got straightened out, all the bills were resissued with the insurance $$ numbers.

The amounts that the hospital charged the uninsured was HIGHER, MUCH HIGHER (in fact, astonishingly so) when compared with the bucks the hospital accepted from the insurer.

:wtf: is wrong with this picture? :wtf: I have since found out that this is almost universally the case. Hospitals charge "discount rates" to the insurer because of volume, but an uninsured person has to pay full freight, evn when it is DOUBLE what the insurer gets charged by the hospital.

Not only is something deeply immoral about that, kicking people when they're down and ALSO A VERY CALLOUS, CRUEL...very BUSHIE, but I am afraid this fact directly contravenes your assertion, the more I think about it.

What say you, sir?

[frank78]

11. i say

it's really friggin late and i'll have to get back to ya. Good questions though. I can shed some light.

[entanglement]

4. The college loan industry is a stark example of socialized costs and privatized profits

Congress should end ALL subsidies to private lenders and redirect them to student loans / grants. Cut off the middlemen completely from the Federal trough.

[frank78]

7. however

No matter whether cut out the middleman or not, the federal subsidies end up being a major reason why college tuition rates are going up WAAAAY faster than inflation is. Food, rent, clothing are all pretty stable. They stick very close to inflation. College tuition is growing much, much faster than tuition. The more money the feds send for aid, the faster the tuition climbs. Especially private colleges. Some states are putting strict rates on the tuition prices for the public universities. I'd like to know however, is the increased cost just getting passed along to the taxpayers of the states???

After all, state universities are mostly funded through state taxes. If the tuition rates for students are getting slowed by the state govt, are the state govts simply greatly increasing the bill sent to the taxpayers??? Anyone have some stats on this???

[Donnachaidh]

12. yeah really -- WTF are we doing subsidizing the LENDERS?

Is this yet another large dose of Corporate Welfare? It's the STUDENTS that need the subsidizing. :grr:

[NJCher]

14. we didn't in the past

But when the republicans took control over three branches of gov't, you know what can happen.



Cher

[ClintonTyree]

15. This does nothing to help recent graduates....

who are saddled with tens of thousands of dollars of debt. I guess they're shit out of luck. TOO BAD, SUCKERS! My daughter being one of them. :grr:

[Zodiak]

16. I've got a monstrous student loan, too

But the way I see it is they can't take my degree away from me. It's a PhD, so I am marketable worldwide (working overseas with US inflation like it is allows one to pay the debt back faster).

I find it revealing that the rest of the industrialized world values education enough to make college tuition cheap or free for those qualified to attend. Here, intelligence and drive only mark a person as a rube to be milked of tens of thousands of dollars before their career even starts.

And 2/3 of students do not even finish college even though they have amassed the debt nonetheless. It is for them I feel the most sorry because they did not improve their marketability one iota by attending.

But there is ALWAYS money for more weapons and more war.

[Ravachol]

19. Here in Quebec, Canada...

We have a quite different education system than you guys down south but, to cut things short:
High School is totally free. You can choose to pay for a private school, if that's your thing, though.
College (CEGEP as it is called here) costs about 200 bucks a semester for the number of classes you desire. Average is about 6 or 7 for a good 26-28 hours of class a week. Completly public system.
University costs anywhere between 830-1300$ a semester, depending on your number of units. Actually costs me about 1100$. Then again, completly public but there's a few semi-public institutions, though not really popular.

I'll have about 15 500$ of debt by the end, in two years, contracted through the Loans & Bursaries Program. I'll owe that money to our provincial government and won't have to pay any interest for it.

Heard it was much more expensive on your side of the border. Like nightmarish. Just thought I'd offer a comparaison.

[Posteritatis]

20. Heh, I'm paying around twice that and not really arguing

Just started a graduate program at UWO this fall, about 2.1K per semester. It feels cheap to me, but I came from Nova Scotia where the tuition's about half again as high because the previous government/cabinet went out of its way to go after education. If my impressions of this place are right, though, I think I'm getting my money's worth. A friend of mine was considering Duke until he realized it was like six digits a year or something completely bugfuck insane like that, especially after converting from the relatively weak Canadian dollar in the nineties.

Still envy those bastards at Memorial who pay like $2K/year, though. ;P

(And I've always liked the college/university dichotomy up here.)

[Bassic]

21. Yeah, but university costs are on the verge of drastically increasing.

It's probably going to stay the same for CEGEP though, which is good.