Yesterday, the House of Representatives formally introduced legislation to reshape federal student loans, federal Pell Grants, and other aspects of student financial aid. The Student Aid and Fiscal Responsibility Act of 2009 builds on presidential budget recommendations and features several substantial changes to student aid.
A preliminary breakdown of the bill provided by the National Association of Student Financial Aid Administrators lays out the following proposed changes:
- Dividing the Federal Pell Grant into mandatory and appropriated funding, then fixing the mandatory portion to the consumer price index plus 1 percent. Currently, the mandatory portion of the grant is $490 and the appropriated portion is $4860, so if these proportions remain the same, increases in the Pell Grant would still largely be at the whim of Congress each year.
- Eliminating several questions on the FAFSA related to assets, but preventing anyone with assets of over $150,000 from qualifying for federal student aid.
- Ending the Federal Family Education Loan Program and moving all federal Stafford Loans to Direct Loans.
- Ending subsidized Stafford Loans for graduate and professional students in 2015.
- Reverting to a variable interest rate that would be capped at 6.8 percent for subsidized Stafford Loans.
- Expanding the Federal Perkins Loan program, with part of the new funding going specifically to schools that keep tuition low and graduate a high proportion of Pell-eligible students.
- Changing the rules for drug offenses to make students ineligible for aid only if they've been arrested for selling a controlled substance.
The Democratic majority in the House has indicated a strong intention to pass this bill quickly, with the Committee on Education and Labor planning to vote on it as early as next week.