In light of the monetary devastations caused by the recent SUNY budget cuts, the Senate hopes to bridge the financial gap for many college students in passing the Student Aid and Fiscal Responsibility Act on Tuesday.
With the passage of this act, $68 billion will be redirected from private loan companies back to those students who are in need of financial aid, making this the largest federal contribution to college affordability in U.S. history.
Rep Louise Slaughter, D-NY, held a key role in this legislation as chairwoman of the House Rules Committee, being that it is the last stop for key legislation before the act goes to the floor of the house, according to a press release.
The Student Aid and Fiscal Responsibility Act, thanks to a legislative device called reconciliation, is being combined as part of the Health Care and Education Reconciliation Act of 2010 that was passed last week.
"The student aid reforms in this bill have been overshadowed by health care reform, but are important in their own right," Slaughter said. "This marks a new era for students across Western New York and reaffirms our commitment to higher education. It also guarantees that our future workforce is well educated."
This student loan act included in the new health care bill intends to make considerable improvements to the federal student loan program.
"We're going to cut out the middleman, giving an extra $68 billion directly to the students who need it most. We're using that money to expand Pell Grants and loan forgiveness for public service, and to make sure that payments are affordable for borrowers," Slaughter said.
According to a press release and the Congressional Budget Office, by completely cutting out private banks that are currently making a profit from the federal loan system, the SAFRA will save $68 billion, allowing that money to be reinvested to the federal aid system.
Additionally, Pell Grants will gain an investment of $40 billion, helping to cover the increased demand for these grants that occurred during the recession. These grant amounts will be indexed to inflation.
In accordance with the SAFRA, making payments on student loans will also become significantly more affordable for new borrowers and public servants, including nurses, those in military services, and teachers.
New borrowers who remain in good financial standing throughout their entire loan process will have their remaining balance forgiven after 20 years. These new borrowers will also be able to max the payments they make at 10 percent of their discretionary income.
The loan forgiveness entitled to public servants includes eligibility for debt forgiveness after 10 years.
This legislation will invest billions of dollars into community colleges, Historical Black Colleges and Universities, and Minority Serving Institutions. Furthermore, as promised by Obama's campaign and presidential agenda, the SAFRA will make the completion of FAFSA forms much simpler, hopefully encouraging an increase in the number of aid applications filed.
In general, thousands of college students in Western New York will see substantial perks in the passing of the SAFRA, according to Slaughter.
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Photo: Breadchastick / Wikimedia Commons
