New bill simplifies, increases aid

For many NYU students, taking out loans is crucial.

A proposed bill, however, could lead the way for more federal involvement with student loans — an effort that would provide more aid for higher education.

The Student Aid and Fiscal Responsibility Act of 2009 (H.R. 3221) would amend the Higher Education Act of 1965 and end a program that gives government subsidies to private student loan companies. Those loans would instead be handled directly by the government. The House of Representatives passed the bill Sept. 17, and the Senate received it Sept. 20.

"I'm glad that the government is getting rid of the middleman for dealing with loans," CAS sophomore Melanie Bradshaw said. "It seems like a much more direct and efficient way."

The bill will also attempt to simplify the Free Application for Federal Student Aid process.

The current FAFSA has upward of 150 questions about income and assets.

NYU professor Robert Teranishi believes this is excessive.

"It's been found that much of this information has little to no impact on student aid eligibility," said Teranishi, associate professor of higher education and a faculty affiliate with the Steinhardt Institute for Higher Education Policy. "Because of this, there's an estimated 1 million students that qualify but fail to submit the FAFSA."

For many students, the reorganization of FAFSA comes as an overdue relief.

"FAFSA has this strange scale, where it supposedly 'calculates' how much your family can contribute," CAS sophomore Marina Lee said. "This scale is awful for those kids in the middle class spectrum because FAFSA takes all assets into account, even the ones that cannot necessarily be liquidated. Thus the 'family contribution' amount is much higher than the family in reality can actually contribute."

Lee added: "I mean does the government expect the rest of the family to sell their home and all their assets in order to send one of their kids to college?"

The Congressional Budget Office estimates that enacting the bill will save approximately $74.8 billion over the next 10 years. This money can then be used to increase the amount of student aid available and to invest in education.

College tuition and fees generally increase at more than double the rate of inflation, according to the College Board.

"That's a pretty remarkable trend," Teranishi said. "Essentially, financial aid has become a necessity."

The bill increases aid through Pell Grants and Perkins Loans and helps to keep interest rates lower on students' subsidized loans. There is also an investment of $10 billion in community colleges, as well as an investment of $2.5 billion in historically black colleges and universities and other minority-serving institutions.

Teranishi believes this is the first significant federal investment in higher education since the G.I. Bill.

Rep. George Miller, D-Calif., chair of the Education and Labor Committee, introduced the legislation last July.

"The economic downturn has made an already tough college affordability crisis worse for America's students and families," said Rachel Racusen, a spokesperson for Miller. "As President Obama has made clear, we've got a lot of work to do if we're serious about building a strong economy for years to come and reversing the many trends that threaten our competitive future."

Valerie Bogard is a contributing writer.