Student Associations Lobby for Bill to Revamp Student Loans

Student governments and organizations at colleges and universities nationwide are pushing lawmakers to pass legislation that supporters say will make acquiring a higher education more accessible and affordable.

The legislative measure, known as the Student Aid and Fiscal Responsibility Act (SAFRA), was passed by the House of Representatives on Sept. 17 in a vote of 253 to 171, largely along party lines. All but four Democrats voted for the bill, and only six Republicans also voted in favor. The bill is expected to be put to a vote on the Senate floor on Oct. 15.

The bill, if passed, would essentially mean an overhaul of the current college financial aid system, eliminating one of the two existing national programs that provides students and parents with federal college loans.

This landmark legislation would shut down the long-standing Federal Family Education Loan Program (FFELP), which issues federally guaranteed student loans to borrowers via banks, state organizations, and other private lenders. The government currently pays these private FFELP lenders a subsidy for the federal parent and student loans these lenders issue.

Under the SAFRA bill, all federal student loans would be issued through the second national student loan program, the Federal Direct Student Loan Program, which issues federal college loans directly to borrowers through the U.S. Department of Education, with no third-party involvement from a bank or other FFELP lender and thus with no government subsidies being paid to a middleman.

SAFRA supporters, which include many college student organizations, say that ending government subsidies to third-party FFELP lenders to originate federal student loans will save taxpayers $87 billion over the next decade — which means more funds available for federal college grants and other higher education initiatives.

“FFELP is expensive for the government,” Kathleen Templin, president of the Associated Students of Northern Arizona University, told the NAU online newspaper, JackCentral. “They give money to banks, which in turn gives money to students. But because banks charge interest rates, the government pays a lot of money for lenders to give money out” (“Student Aid Act Passes in U.S. House, Due for Senate,” JackCentral.com, Sept. 24, 2009).

In fact, SAFRA allocates $40 billion of the projected $87 billion in savings to expand the Federal Pell Grant program, which targets low-income students.

Students Applaud Expansion of Federal Pell Grants

Several student governments from across the country have joined forces with the United States Student Association (USSA), the main voice for students on Capitol Hill, to organize meetings with legislators to press the importance of financing higher education in building a better American work force.

“A lot of students are not able to go to school because of funding,” said Teresa Mabry, the chair for the Women of Color Caucus on the USSA board of directors. “If we’re not getting [our message] out there, it’s not going to work.”

Added Templin, “The cost of college keeps going up, but grants were not going up because the government is not re-authorizing money, so it created this huge gap students had to pay. … Last year, six million students received the Pell Grant. If SAFRA is passed, even more students can receive scholarships.”

In addition to increasing funding for Pell Grants, the SAFRA bill also sets aside $10 billion for the nation’s community colleges to strengthen job-training and adult-education programs; $2.5 billion for historically Black colleges and universities, as well as minority-serving institutions, to boost graduation rates; $4 billion for school modernization, renovation, and repair projects across the country; and $8 billion for various early education programs.

The Obama administration has also been a vocal backer of the bill, and President Obama has assured voters that he will sign the SAFRA legislation into law once it clears the Senate.