The House of Representatives passed a bill last Thursday that will increase federally-funded aid to college students and end federal subsidies to private lenders.
The Student Aid and Fiscal Responsibility Act, H.R. 3221, was passed with a vote of 253 to 171 and will go to the Senate by the end of the month.
If passed, the measure will require all colleges to convert to Federal Direct Loans by July 2010.
According to Vincent Amoroso, director of Student Financial Services, this legislation will have no immediate impact on Hopkins because the University already fully participates in the Direct Loan program.
"There is some concern that the federal government won't be able to provide the same level of support to schools and students who are in the program once all colleges have joined," Amoroso wrote in an e-mail to the News-Letter.
Amoroso explained that students at Hopkins who take loans go through the federal program. Only when the amount offered by the federal government is not sufficient do students seek privately-funded loans.
"It's really a non-issue," Amoroso said, with respect to the impact this bill will have at Hopkins.
According to Amoroso, private lenders have difficulty securing credit to offer loans.
"The idea behind the bill is to have the federal government fund loans to insure that students have access to the funds they need," Amoroso said.
Economics Professor Hulya Eraslan acknowledged that the bill seems like a good idea for the short run because credit is tight right now.
"I am not familiar with the design of incentives within the government unit that will deal with these loans," Eraslan wrote n an email to the News-Letter.
"In the long run, it would be desirable to create competition from the private sector so that these incentives are well designed and inefficiencies associated with bureaucracy are avoided."
The shift to direct federal loans is estimated to save more than $80 billion over ten years by ending subsidies to private lenders, according to the Congressional Budget Office.
This money will be put toward Pell grants for low-income college students, investment in community colleges and other education efforts.
The legislation would increase the maximum Pell grant to $5,550. The maximum Pell grant awarded for the 2009-10 award year was $5,350.
In addition, the legislation would invest $10 billion into community colleges, $8 billon in early childhood education and $4.1 billon to repair college facilities.Of the 253-to-171 result in the House, only five Republicans voted in favor of the measure, although Democrats claim it has bipartisan support.
Seven of the eight Maryland congressmen voted aye. The only nay vote came from Roscoe Bartlett (R-MD), the one Republican congressman in the state.
"Other than defending the nation, nothing is more important to me than ensuring the next generation of the country will have an equal chance at [education]," Congressman Elijah Cummings (D-MD) wrote in an email to the News-Letter.
"This bill will help that happen. We will invest more than $480 million just in Maryland, while we increase the maximum Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019," Cummings wrote.
"Giving that many students a real shot at a college education is a great step forward for our future."
Congressman John Sarbanes (D-MD) also expressed his belief that this act will allow more students to pursue college educations.
"Strengthening the Pell Grant program will make college dreams a reality for millions of hardworking young Americans who might not otherwise have the means to attend," Sarbanes wrote in a press release to show his support for the bill.
Although the investments made with the money saved from this legislation are favorably looked upon by most, opponents of the bill do not fully trust the numbers produced by the Obama administration regarding the effects of this legislation.
"The Obama plan is littered with bad accounting and comes with the loss of 27,000 [Federal Family Education Loan Program] jobs," Douglas Tonkinson, President of the College Republicans wrote in an email to the News-Letter.
"In the current loan market, it's the private sector that takes on the most risky student loans," Tonkinson wrote. "The government proved back in 2007 that it is not capable of efficiently managing the loan market when it could not get private lenders for federally backed loans because they set the return too low."
Daniel Barash, President of the College Democrats, stated on behalf of the College Democrats that it is not surprising that Republicans in Congress and the middlemen private lenders oppose this legislation.
"Obviously private lenders oppose this legislation because it cuts the taxpayer subsidies that boost their bottom lines," Barash wrote.
"Thanks to this legislation, the federal government can stop wasting taxpayer dollars on subsidizing middlemen-the private lenders-and, in its place, create a more efficient system that works for more students."
"It seems like it doesn't matter as long as students get the loans they need," Sophomore Millie Shah said.
"And it seems like it's better to invest money in other areas, rather than just into [subsidies for loans]."
Whether the legislation will actually increase the amount of aid available to students will only known in time, according to Amoroso.
