Congress passes tuition relief bill

Author: Zamir Ahmed

College students, like others nationwide, may soon feel greater federal assistance when it comes time to open their wallets and pay for college. On Sept. 7, the U.S. House of Representatives and Senate passed the College Cost Reduction and Access Act, which will be the federal government's largest investment in higher education since the G.I. Bill if signed by President George W. Bush.

The bill, amended after President Bush threatened to veto an earlier form of the law, increases the amount that students can borrow through Stafford loans, as well as raises the maximum amount low- to middle-income students can borrow through Pell grants, which do not have to be repaid, by over $1,000 over the next five years.

According to Senator Edward Kennedy, D-MA, chairman of the Education Committee and a chief architect of the bill, reducing the cost of tuition for low- to middle-income students will create more opportunities for these students and stimulate the economy.

"A college degree leads to greater skills, better employment opportunities, and higher pay and an educated America enhances the nation's productivity and leadership in the global economy," wrote Kennedy in a press release on his Web site.

While the passage of the bill may help more students afford the escalating cost of college nationally, which has grown by almost 40 percent in the past five years, the act may not make as large a splash at the College. Currently, only nine percent of Middlebury students receive Pell grants, with those students receiving almost $700,000 through the program. In addition, 410 students borrowed Stafford loans for this year, accepting over $15 million in aid. However, the College relies more on other federal programs not addressed by the new act to assist students.

"Stafford loans are not part of the financial aid package offered to meet student's full need," said Director of Student Financial Services Kim Downs in an e-mail. "Currently, the most attractive student loan program available to students is the Federal Perkins Loan. Middlebury College offers this federal need-based loan program in financial aid packages, as this program boasts the lowest interest rate and many competitive forgiveness programs."

However, the College has not ruled out switching to Stafford Loans if the amended program proves more beneficial for students.

"If the College Cost Reduction Act is signed into law, the Stafford Loan program may provide the most cost-savings to the student after three to five years as the proposal calls for the interest rates to drop over the next five years," said Downs. Should that become the case, the College will need to revisit the packaging policy to ensure the most attractive offers to students."

In addition to reducing students' financial burden through changes to federally-subsidized loans, the act will provide loan forgiveness to public servants and those employed in areas of national need over a period of five to 10 years. Students who commit to teaching certain subjects in low-income public schools for at least four years will also receive federal assistance, with the opportunity to receive up to $16,000 in four years, according to Downs. However, the provision may not have a substantial impact at the College.

"We don't have a large teaching program here compared to other schools so it would likely be a minimal impact with regard to cost-savings," said Downs.

To fund the new provisions of the College Cost Reduction and Access Act, the bill calls for an almost $20 billion cut in federal subsidies to private lenders, a measure that proved crucial for Democrats and Republicans, and drew outcries from the industry. Some argued that the law will drive lenders out of business and reduce the options for students, as well as creating a new form of socialism.

The cuts in federal funding to the private lending industry, which turns $85 billion in profit each year, come after investigations by New York Attorney General Andrew Cuomo and Congress into potential conflicts of interest in practices by colleges and private lenders. Over 400 colleges were sent letters by Cuomo's office warning them of potential violations. The College was not cited by the office and appears to not be involved in the controversy.

"This [preferred lender scandal] casts a black eye on the profession but we can say that we are not part of this," said Associate Vice President for Finance and Controller Patrick Norton in April after Cuomo's announcement regarding what he saw as deceitful lending practices. "We have not been contacted by the New York State Attorney General or the Department of Education. We may be, but if we are, we can say we're clean."