The House of Representatives approved a sweeping overhaul of the federal government’s student lending practices last Thursday. The Student Aid and Fiscal Responsibility Act of 2009, now being debated by the Senate, will cease subsidies to private banks providing federal student loans.
Instead, the federal government will directly make loans to student, saving some $40 billion over 10 years. The Act will then redirect those savings to increase funding for the Pell Grant, expanding the number of eligible students and upping the maximum award to $5,550 per year.
Additional changes in the bill include:
- Expanding the Perkins Loan Program for low-income students
- Allocating $10 billion to Obama’s community college initiative, which aims to produce 5 million more 2-year college grads by 2020
- Give grants to states and institutions with innovative approaches to increase college retention and graduation rates
- Simplify the FAFSA form
The bill passed the House with overwhelming Democratic support, and just five Republican votes. Congressional leaders expect a similar partisan split in the Senate vote.