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The Daily OrangeLegislation to revise student lending
SU official says change will increase loan demand
By Matt Reilly
Posted: 7/17/07, 10:39 AM EST Section: News
JULY 17, 10:40 A.M. - The rippling effects of the investigation by New York State Attorney General Andrew Cuomo have reached the nation's capital as the House of Representatives passed a bill that will revamp the student lending landscape.
Students entering college in fall 2008 will be the first class to face the changes, which shift the support of the federal government towards government-sponsored loans and Pell Grants as opposed to private loans. The bill would cut $19 billion worth of subsidies to private lenders, while halving the interest rate for government loans to 3.4 percent within five years. The current interest rate is 6.8 percent.
The maximum award for a Pell Grant, financial aid provided to students based on the Free Application for Federal Student Aid (FAFSA), would increase to $5,200 by 2011.
And while this stage of the legislative process is still early, The New York Times reported the bill will likely become law later this year. The Senate will debate on a similar bill later this month and, though President George W. Bush does not support the bill completely, it is expected that he will sign it into law.
Financing college education has been a growing concern for years now. At Syracuse University, the cost of tuition and expenses for the upcoming school year is an estimated $45,280, according to the College Board. Nationally, the cost of obtaining a higher education has outpaced inflation by 40 percent since 2002.
SU's Dean of Financial Aid, Christopher Walsh, said the bill won't directly affect students, but it will increase demand for student loans.
The powerful lobby of the student-lending industry has argued that students will face the consequences of reduced services and discounts.
That could become a hassle for SU students with private loans. Walsh said private loans have been increasing each year and are "becoming more and more important."
Of the 11,546 undergraduates at SU, 13 percent of students have private loans and 65 percent receive government loans. Walsh doesn't think these numbers will change too drastically following the passage of the legislation.
Students entering college in fall 2008 will be the first class to face the changes, which shift the support of the federal government towards government-sponsored loans and Pell Grants as opposed to private loans. The bill would cut $19 billion worth of subsidies to private lenders, while halving the interest rate for government loans to 3.4 percent within five years. The current interest rate is 6.8 percent.
The maximum award for a Pell Grant, financial aid provided to students based on the Free Application for Federal Student Aid (FAFSA), would increase to $5,200 by 2011.
And while this stage of the legislative process is still early, The New York Times reported the bill will likely become law later this year. The Senate will debate on a similar bill later this month and, though President George W. Bush does not support the bill completely, it is expected that he will sign it into law.
Financing college education has been a growing concern for years now. At Syracuse University, the cost of tuition and expenses for the upcoming school year is an estimated $45,280, according to the College Board. Nationally, the cost of obtaining a higher education has outpaced inflation by 40 percent since 2002.
SU's Dean of Financial Aid, Christopher Walsh, said the bill won't directly affect students, but it will increase demand for student loans.
The powerful lobby of the student-lending industry has argued that students will face the consequences of reduced services and discounts.
That could become a hassle for SU students with private loans. Walsh said private loans have been increasing each year and are "becoming more and more important."
Of the 11,546 undergraduates at SU, 13 percent of students have private loans and 65 percent receive government loans. Walsh doesn't think these numbers will change too drastically following the passage of the legislation.
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