House of Representatives Passes Key Student Loan BillSeptember 18, 2009
It’s often said that you can’t put a price tag on a good education. Millions of current and former students, however, know quite well that a good education can costs tens or even hundreds of thousands of dollars — plus interest. For these students, fortunately, today was a good day in Washington, D.C.
Earlier today, the U.S. House of Representatives took a strong step toward curbing the astronomical price tag of higher education with the passage of the Student Aid and Fiscal Responsibility Act (H.R.3221). Sponsored by Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, the bill passed the House by a bipartisan vote of 253-171. AAUW strongly supported passage, and we are pleased that the Senate is working on its own version of the bill.
The bill would take a number of steps to make achieving the dream of higher education a reality — and more affordable. AAUW strongly supports the bill’s provisions to move all federal loans to the Direct Lending program by 2010, a proposal advanced by President Obama in his 2010 budget request. The bill will establish a competitive bidding process that allows the Department of Education to select lenders based on how well they serve borrowers, educate them financially, and prevent increasingly common loan defaults. Moving all loans to the Direct Lending program will save the federal government and taxpayers almost $100 billion over the next 10 years, as it eliminates the taxpayer-funded subsidies private lenders have been receiving to make student loans. The savings would then be used to strengthen the Pell grant program, keep interest rates on student loans low, improve community colleges, and expand early childhood education — all without costing taxpayers a single extra dime.
AAUW enthusiastically supports the bill’s expansion of the Pell grant funding program. Of the almost $100 billion in savings created by moving to the Direct Lending program, approximately $40 billion of this will be used to increase Pell grant funding — resulting in a maximum Pell grant award of $5,550 for 2010. In future years, instead of remaining stagnant, the maximum award would automatically increase by an amount equivalent to the Consumer Price Index (CPI) plus 1 percent. At this rate, the maximum Pell award is estimated to increase to $6,900 by 2019. By taking this important step, the Pell award will reflect inflation and will not lose value over time — a problem that has plagued the program in the past.
While this bill will help all students, women in particular stand to gain. As we know all too well — and as the Census Bureau recently reminded us — women earn significantly less on average over the course of their lives than their male counterparts. AAUW’s Behind the Pay Gap report found that college-educated women earn 5 percent less than men one year out of college and 12 percent less than men 10 years out of college, even when they have the same major and occupation as their male counterparts and when controlling for factors known to affect earnings such as education and training, parenthood, and hours worked. These findings suggest that sex discrimination not only continues to be a problem in the workplace, but that it affects the incomes of even the most educated women starting immediately out of college. This immediate and pernicious wage disparity makes it that much harder for women to repay their student loans. Women also stand to gain from an amendment to the bill that focuses on the need to have more women and underrepresented minorities enter science, technology, engineering, and math (STEM) careers.
Earlier in the week, the Obama administration came out in strong support of this legislation. The Senate now has to act for this bill to become law. AAUW will continue to work hard to ensure that this bill reaches the president’s desk. Millions of students are depending on it.