Financial aid offices across the United States, including Cabrini’s, are working to understand the implications of a major new law passed by Congress this fall that made significant changes in financial aid.
The College Cost Reduction and Access Act, signed on Sept. 27, 2007, will make college more affordable for low-income students by increasing funding for Federal Pell Grants by more than $11.4 billion over the next five years. The Pell Grant program helps ensure that low-income students have access to higher education by providing need-based grants to help students meet education costs.
“This plan will help to ensure that students from low-income backgrounds are given a fair chance to get a better education,” Adriana DePalma, history and political science major said. “I think it’s about time congress thought about low-income students’ dreams.”
According to NASFAA.org, included in the law are attachments that will pay up to $16,000 for students to become teachers at certain schools and in certain subjects. Graduates working in certain public service jobs, such as firefighters, may also be eligible for partial loan forgiveness
The law allows students with federal student loans with private companies to consolidate or reconsolidate into the Direct Loan program beginning July 1, 2008 in order to qualify for public service loan forgiveness.
The Act decreases payments to commercial lenders and guaranty agencies participating in the Federal Family Education Loan Program. It also authorizes increases in the amount of Federal Pell Grants and establishes the Teacher Education Assistance for College and Higher Education Grant Program, TEACH.
According to NASFAA.org, beginning July 1, 2008, the TEACH Grant program will provide up to $4,000 a year in grant aid to undergraduate and graduate students and students enrolled in a post-baccalaureate teacher credential program, or current or prospective teachers. Eligible undergraduate and post-baccalaureate students may not receive more than $16,000 and graduate students may receive no more than $8,000 in total TEACH Grants.
Students enrolled less than full-time will have their TEACH Grant reduced according to a schedule established by the Department in regulations.
CCRAA will lower the interest rates on some student loans and expand loan repayment options for student borrowers. The Act also creates a new loan forgiveness plan for public service employees. In addition, the Act also provides funding for several institutional grant programs aimed at improving minority-serving institutions.
The bill the President signed will expand this program by allowing the maximum Pell award to increase from $4,310 in 2007 to $5,400 by 2012.
According to whitehouse.gov, The President promises to work with Congress to ensure that the increases in funding for Pell Grants not paid for in this bill are paid for with reductions in other areas of spending – not by raising taxes on the American people.
The Administration will closely monitor the effects of the bill’s provisions to ensure they do not cause unintended consequences, increase taxpayer costs, or upset the vital competitive balance between the Federal Family Education Loan and Direct Loan programs
The President will also continue working with Congress to expand access and affordability in higher education.
“It seems that any effort to enhance Pell Grants serves the common good,” Dr. Jolyon Girard, history and political science professor, said. Girard said that there are those who would argue that the government should allocate more funds for the program, and others maintain that it is too much additional funding. “Those always tend to be the liberal and conservative aspects of any legislation involving federal funding. It appears to me that the increase seems reasonable and beneficial,” Girard said.
On the other hand some believe that though the act sounds great, the actual benefits will affect relatively few students. According to the Chicago Sun Times.com, Pell grants made to the lowest-income students increase from $4,310 in 2007 to $5,400 by 2012– an additional $11 billion in funding over the next five years. Lenders will face a squeeze on profits because of reduced payments from the government to subsidize their activities.
According to the Chicago Sun Times.com, the real story behind these headlines is the fact that many families are suddenly waking up to the fact that college has become unaffordable. Students graduate with huge debt burdens, larger than their parent’s original mortgage.
Mike Colahan, director of Financial Aid, states that a huge chunk of the college’s budget works towards loans and financial aid. He stressed how hard Cabrini works to keep the costs down.
“The real issue is not the aid, its college costs,” Colahan said.