The Student Aid and Fiscal Responsibility Act: Current students screwed out of the bill?

The Student Aid and Fiscal Responsibility Act was signed into law on March 30, 2010 as part of the Health Care and Reconciliation bill that passed March 21, 2010 by a vote of 220-211. The Education Reconciliation portion of the bill will reduce the cost of interest on student loans, increase funding and support of Community Colleges, Historically Black colleges and minority serving institutions in addition to increasing the maximum on the Pell Grants over the next 10 years. While the Student Aid and Fiscal Responsibility Act marks the single biggest investment in financial aid to date, with many of its changes not effective till 2014, it has many wondering how the current expense of college will change for those already enrolled and accumulating debt.

Kris Wilson, a senior in high school is weighing his college decision now by what will cause the least financial burden. Having been accepted to Pratt and Parsons in New York City and Cornish College of the Arts in Seattle, he’s waiting on his Financial Aid letters from Parsons and Cornish before making his final decision. “Including work study I was given about $16,000 at Pratt; still left with a $30,000+ gap between what I was given and the cost of attendance” Wilson said. With the total cost of attendance being $ 52,000 and the remaining $36,000 being offered to him in loans, he fears the cost will be too much of a burden for his family over the next four years.

Wilson is vaguely aware of the changes being proposed by The Student Aid and Fiscal Responsibility Act because of a conversation with a teacher; despite changes that will affect his attendance he remains skeptical. “From the looks of it, anything changed in this bill won't come into effect until my senior year of college. So the hopes that it will affect me are low,” Wilson said.

Starting in 2014 students who take loans out will have interest rates no higher than 10% (that’s a 5% decrease from the current cap at 15%). After 20 years, loan forgiveness will be granted to those who keep up with their payments. For students who go into a public service field such as teaching, nursing and the army, loan forgiveness will be granted after 10 years. Financial Aid Expert Bill Mack feels that the new change in loan forgiveness will affect few. “The previous rule forgave the unpaid balance after 25 years .The usual repayment term is 10 years, and most students elect for that option. Mack said.”

As a part of The Student Aid and Fiscal Responsibility Act, 36 billion dollars is being invested to increase the maximum on Pell Grants. By 2017 the new maximum will be $5,975, and by 2013 the maximum of Pell Grants will be consistent with the rising cost-of-living. $2.55 billion will go towards Historically Black Colleges and Universities and institutions that serve a major population of minority students to support student retention and fund supportive programs. Community Colleges, which enroll over six million students, making them the largest portion of higher education, will see $2 billion dollars over the next four years. The funding will go towards the improvement of career education and training programs. Additionally, $750 million dollars will go to increasing the College Access Grant program which provides funding for educational programs on a state level, it also supports institutions that focus on financial literacy.

Even with the large amount of money that’s being spent on the reformation of educational programs and financial support we still will not see a lot of major changes for at least the next three years. Even so, politicians and financial experts alike have their doubts any changes will be less than major. Mark Kantrowitz, a leading expert from finaid.org says that a lot that was to be in the bill was sacrificed when the saving budget was cut by $30 billion dollars.

“They eliminated 10 billion dollars in funding for community colleges. They had to cut a College Access Grant from 3 billion to 750 million (a four fold decrease). They had to drop a proposal that cost a billion and a half. A lot had to be dropped as a consequence of those delays, Kantrowitz said.”

The only benefit for current students Kantrowitz says is that “any student that was in the FFCF program in new loans or past loans in general, they get the benefit of the lower interest rate in the direct loan program. There's also a higher approval rate. “

“Nobody knows what the outcome will be, there are over 2,000 pages of legislation all tied together, the senator would have been more supportive with a bill in which the consequences were known”, Kyle Hines, press secretary for senator James E. Risch of Idaho said.

The Student Aid and Fiscal Responsibility Act marks a large and necessary investment in our education system but the reality is, it’s a new act and no one knows what to expect, to many it’s still news.