President Obama’s plan to federalize student loans and increase funding for the Pell Grant cleared its first legislative hurdle today when the House Education Committee approved the plan.
Known as the Student Aid and Fiscal Responsibility Act of 2009, the President’s plan would expand the number of students eligible for Pell Grants. Currently 40 percent of American college students receive Pell Grant assistance. In addition, the bill would tie the dollar amount of the Pell Grant to the rate of inflation, allowing for a maximum increase from $5,550 next year to $6,900 by 2019.
In order to pay for the increase in Pell Grant funding, the bill would eliminate subsidies for federal student loans by private lenders such as Sallie Mae, replacing them with direct loans from the federal government. To learn more about the Student Aid and Fiscal Responsibility Act, check out this post from back in February when the President first announced his plan to overhaul student loans.