House, Senate Bills Address Financial Aid

Proposed Legislation Calls for More Grants, Fewer Loans

Both the House of Representatives and the Senate are considering bills which would change the Higher Education Act and alter several aspects of federal financial aid programs.

The most dramatic change outlined in the bills would be the elimination of banks from the Stafford Loan Program. By creating a Direct Loan Program, students would borrow money from the federal government instead of from banks.

According to James S. Miller, Harvard director of financial aid, the Direct Loan Program would save the federal government "a significant amount of money" that could be applied to grants.

Because Harvard is one of the few universities that currently lends money to undergraduates and graduates, the proposed bill would affect the University differently than most other colleges.

"Harvard is now acting like a bank, since it is lending money and collecting interest," said Thomas R. Wolanin, staff director of the House's Post-Secondary Education Panel. "If the bill is passed, they would continue to be an originator, but instead of using their own funds, they would be using federal funds."


Another feature of the House bill involves changes to the Pell Grant program. The income level to qualify for Pell Grants would be raised from $35,000 to $44,000.

In addition, the minimum Pell grant would be raised from $200 to $400, and the maximum Pell Grant would be raised from $2400 to $4500.

Miller said he supports the proposed change because it will help reverse the current trend toward more loans and fewer grants in financial aid packages.

"Anything that helps correct the growing imbalance between loans and grants is beneficial," said Miller.

A spokesperson for Sen. Edward M. Kennedy '54-'56 (D-Mass.), the sponsor of the Senate bill, said that the expansion of the Pell Grant program would "open up access to aid to middle-class families who too often find themselves left out."

Pell Grants are listed as entitlements in the federal budget agreement. According to the spokesperson, this means the increase in Pell Grant funding would only be possible by cutting other entitlements, increasing the federal budget deficit or raising taxes.

The House and Senate bills also call for the creation of a single application for all federal aid programs, which would replace the multiple applications now required.

Miller said the federal application will streamline the financial aid process.

'Will Eliminate Confusion'

"It will eliminate the complexity and confusion for students applying for financial aid," Miller said, explaining that the application would create "one-stop shopping" for federal aid.

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