House College Financial Aid Bill Saves Money for Students and Taxpayers

Washington, D.C. -- The U.S. House of Representatives today approved the Student Aid and Financial Responsibility Act, cosponsored by Hawaii Rep. Neil Abercrombie.  The bill will save taxpayers $87 billion over ten years by cutting subsidies and guarantees for high interest rate student loans from private lenders, and will plow $77 billion of the savings into more of the cheaper direct government student loans, increases in Pell Grants and other education improvements.  Net benefit to students and their families: more opportunity for a college education.  Net cost to the taxpayer: zero.

“My primary goal with this legislation is to make federal student loans more affordable for Hawaii students, their families and for taxpayers,” said Abercrombie.  “The economic downturn has made the constantly-increasing cost of higher education an even heavier burden.  Yet, expanding access to education is one of surest ways to build a stronger, more competitive American economy for the long-term future.”

Cutting government subsidies and guarantees for private lenders will save $87 billion over the next ten years.  Part of the savings will be used to provide more student loans directly from the U. S. Department of Education, which offer lower interest rates and cost less to administer.  $40 billion will be transferred to the Pell Grant program, which makes need-based education grants based on family income.  Private lenders could still be paid to service student loans. 

About 14,000 Hawaii students received Pell Grants this year.  More than 24 thousand would be eligible in the 2010 academic year.  The maximum grant will increase from $5350 this year to $5,550 in 2010, and to $6,900 by 2019.

The legislation also provides funds for public school modernization, renovation and repair for healthier, safer and more energy efficient learning environments.  Hawaii will receive $11.9 million over the next two years.  And, the measure creates an Early Learning Challenge Fun, offering $1 billion in competitive grants each year to states that implement standards-based early learning programs to better prepare keiki to learn in elementary school.

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