Not many people paid attention to the Student Aid and Fiscal Responsiblity Act until the defunding ACORN bill was attached as an amendment on HR3221 and passed by Congress last week. So, Michelle and I have prepared this brief tutorial:
The SAFRA legislation completely eliminates private capital markets from student lending making all student loans funded through federal direct lending . With the government in charge of lending, there will be no reason for economic common sense in determining student loans, you ask, you get. SAFRA supporters say that transitioning from guaranteed to direct lending would save $87 billion over 10 years. The cost of quintupling the volume of direct lending is hard to predict and bureaucracies have a strong inherent tendency to grow. Can you do the math?
Today, about a third of college students take at least one remedial course, only 56% graduate within six years and 29% of Americans have bachelor's degrees, even though only a 25% of American jobs require them. Does SAFRA make the way for professional students? Maybe.
SAFRA would direct $47 billion to PELL Grants and require that grant amounts rise annually at the rate of inflation plus-one point. That would assist low-income students better than federal loans, but also set an ever-rising floor under which schools, would never lower tuition prices, negating its value.
Next, we have school improvements: SAFRA would send about $9.5 billion to community collegs, $2.5 billion would go towards improving facilities and the remainder towards grants to push schools to improve their program-completion and job placement rates. Then $6 billion to community colleges for simply providing 'student support services' and implementing 'other innovative programs' or as we like to call it: free money.
But wait there's more, $8 billion is slated to go to early childhood education and $4 billion to repair and modernize colleges, elementary and secondary schools.
Finally, $10 billion is supposed to go towards reducing the federal government's deficit. I thought we were saving $87 billion, but with a deficit of $1 trillion, just how long is that going to take? It doesn't add up. Maybe we didn't stay in school long enough.
Laura and Michelle