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Experts Call for Sweeping Overhaul of Financial Aid

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September 22, 2008 by Mara Strom

A panel of financial aid experts thinks that America’s federal financial aid system needs a major overhaul.  According to the Rethinking Student Aid study

group, these changes include simplifying the application process (aka FAFSA, or the Free Application for Federal Student Aid) and increasing Pell grant maximums.

The most sweeping change recommended by the Fulfilling the Commitment report is the creation of federally-funded college savings accounts for children from low-income families. Each year, the government would add money to a fund for each eligible child, until that child turned 18. To draw on the fund, the money would have to be used to cover approved college expenses.  The group recommends starting the program from the age of 5.

The Group also wants Congress to significantly lower interest rates on federal loan programs, including the PLUS Loan program, so that parents aren’t tempted to take out private student loans. Private loans typically carry higher interest rates and less flexible repayment options.

Go here to download a copy of the report or to learn more about the Rethinking Student Aid study group.  The New York Times also has a great piece summarizing the study group’s findings, which you might also want to check out.

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