 "Photo: Courtesy Photo")
Federal college aid programs may be in for an overhaul if the College Access and Opportunities Act of 2005 is passed into law.
Sponsored by Rep. John Boehner, R-Ohio, the bill would amend the Higher Education Act of 1965 by revising certain rules regarding federal loan assistance and student eligibility for such loans.
The Higher Education Act of 1965 was passed with the assumption it would be periodically revised to ensure it continues to serve the purpose that it was created - to provide more students with a university education. Boehner's new legislation, HR 609 is poised to alter a range of higher education programs, including student and parent loans.
Key provisions of the bill include the shift from fixed to variable loan interest rates and allowing lenders to dole out more money to borrowers. Additionally, by effectively doubling the origination fees of direct federal student loans, the bill would decrease the federal student aid burden by $6.3 billion by 2006, according to the Congressional Budget Office.
Democrats argue the bill will cost students more in the short-term, saving money for the government but putting college students in even greater debt.
"This bill will pick the pockets of students, while continuing to line the pockets of bankers," College Democrats of America President Grant Woodward said.
As student loans exist today, there is an 8.25 percent interest cap depending on fluctuating market and economic factors. Supporters of the bill propose to increase this cap, thereby saving money for the federal government in the short-term.
"(Congress) is trying to reduce the deficit, and they're looking into various programs where they can save money," said the Associate Director for the Office of Financial Aid and Scholarships Aid, Chris Collins. "Higher education is one of those programs.
"We think (the bill) is a bad idea."
San Diego State allows students to borrow money directly from the government and to consolidate their collective loans under a low fixed interest rate. To subsidize students at these low rates becomes very expensive for the federal government.
The shift in interest rates would determine the cost to students based on temporal economic factors. Collins said this variable-interest proposal coupled with the suggestion to increase interest caps leaves him skeptical.
"If this bill were to be passed, SDSU students would pay more money," Collins said.
A little more than half of SDSU students receive federal financial aid.
"Because your (parents') income is over a certain number, you're not qualified for grants," community health education sophomore May Vitas said. "I'm working two jobs to pay for the loans."
Though predicted to pass overwhelmingly, the bill has not yet been approved in the House and, to become law, it would still need Senate approval as well as the president's signature.
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