Good college financial aid bill can be made better

  • By Michelle Singletary
  • Wednesday, June 2, 2004 9:00pm
  • Business

House Republican leaders recently submitted a bill they claim is in the best interest of college students.

The College Access and Opportunity Act is supposed to expand access to higher education for millions of low- and middle-income students. It was introduced by Rep. John Boehner, R-Ohio, chairman of the Committee on Education and the Workforce, and Howard “Buck” McKeon, R-Calif., as part of the effort to reauthorize the Higher Education Act, which governs federal student loans.

Well, I’ve had a chance to look at the proposed legislation and in a nod to Roger Ebert and Richard Roeper, my favorite movie critics, here are my thumbs up or down on various provisions of the bill:

Thumbs down for a move that would change from fixed to variable the interest rate for consolidation loans. This is probably the most controversial issue in the bill. Anyone who has taken out student loans should be paying attention to this proposal.

Right now, student loan borrowers can bundle their various loans into one low fixed-rate loan that can be stretched out as long as 30 years. But we all know that interest rates are not likely to stay as low as they have been recently. If the provision passes and the loan rate is changed to variable, a lot of people will pay thousands of dollars more on their consolidated student loans.

Thumbs up for a proposal to increase loan limits for students in their first and second years. First-year student limits would increase from $2,625 to $3,500. Second-year student limits would increase from $3,500 to $4,500. However, the total amount an undergraduate could borrow would remain unchanged at $23,000.

There are those who think the aggregate loan limits should be higher. I’m not in that camp. Students are already saddled with an amazing amount of debt. I don’t think the government should be pushing the loan limit any higher. The answer to rising tuition costs isn’t in giving people the ability to borrow more. Instead, we should be exploring ways to make college more affordable.

Thumbs down for not significantly increasing Pell Grants, which are need-based assistance given to low-income undergraduates and certain postgraduate students.

This bill would cap the current maximum Pell Grant at $5,800 through 2011. As Rep. George Miller of California, the ranking Democrat on the House Education and the Workforce Committee, points out, last year’s maximum Pell Grant award was worth $500 less in real terms than the maximum award in 1976-77.

By the mid-1990s, the maximum Pell Grant (currently $4,050) paid for only about 34 percent of the average cost of college (tuition, fees, room, and board) at a public four-year college, compared to 84 percent in the mid-1970s, according to a report by the Institute for Higher Education Policy and Scholarship America. It’s vital that we increase the pot for Pell Grants. If we don’t, soon only children of the rich will be able to afford a college education.

Thumbs up for proposing a year-round Pell Grant to help some students who want to accelerate their course-taking.

Thumbs up for a call to repeal the anti-competitive “single-holder” rule, which requires student borrowers who have all of their loans held by a single lender to consolidate with that lender, even if they could obtain better terms and service elsewhere. Repealing the requirement would allow borrowers to shop around for the best loan terms and services.

Thumbs up for a plan to eventually reduce student loan origination fees to 1 percent.

Thumbs up for a provision that would require lenders to report to all the major credit bureaus the payment histories of their borrowers. Sallie Mae, the nation’s leading provider of educational loans, received a lot of criticism (and rightfully so) because it decided, without telling its more than 7 million borrowers, that it would report loan information only to Innovis Data Solutions, a small credit bureau, and to Equifax, one of the big three.

Critics accused Sallie Mae of trying to hide its borrowers from competitors. Amid mounting criticism and threats of legislative action by Senate leaders, Sallie Mae reversed its policy and has now resumed reporting the repayment history of its borrowers to Experian and TransUnion, the other two major credit bureaus. There is no federal law that requires reporting to all the major credit bureaus. Until there is, there could be hundreds of other lenders harming the credit ratings of borrowers because their positive payment histories are not being reported.

Thumbs up for a provision that would put the spotlight on institutions that increase tuition and fees at more than twice the rate of inflation over a three-year period.

Overall, there are some good proposals in this bill, but it shouldn’t be passed as is because there are enough provisions that either don’t do enough for students and graduates or increase their costs.

Washington Post Writers Group

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Melrose and Vine Collective owner Kara Langus in her vintage collection room at her store on Friday, Jan. 5, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
New and vintage women’s boutique aims to dazzle in downtown Everett

Add some sparkle to your wardrobe: Melrose and Vine Collective opened inside a former bank building on Pacific Avenue.

Garry Clark, CEO of Economic Alliance Snohomish County. (Kevin Clark / Herald file)
CEO steps down at Economic Alliance Snohomish County

Garry Clark, who has led the nonprofit chamber of commerce for three years, is leaving to “seek new opportunities.”

Dan Bates / The Herald
When Seattle Genetics founder, Clay Siegall lost his father while in college, he switched from studying for an MD to studying for a PhD., and a goal to treat cancer patients.  His efforts are paying off in lives.
Ex-Seagen CEO to return to Bothell to lead newly relocated biotech firm

Clay Siegall, who resigned from Seagen over allegations of domestic abuse, is now CEO of cancer therapy developer Immunome.

Molbak’s Garden Cafe in Woodinville, Washington. Photographed in 2016. (Andrea Brown / The Herald)
‘Shocked and heartbroken’: Woodinville garden store Molbak’s to close

After 67 years, Molbak’s Home + Garden, a mainstay just across the county line, will cease operations early next year.

Good Cheer’s two thrift stores are great places to find Christmas decorations and other knick-knacks. (File photo by David Welton)
A guide to gift buying on Whidbey Island

Consider these unique gift idea suggestions from the South Whidbey Record and the Whidbey News-Times

Senior Hailey Jardine uses the new heat press for DECA to make school apparel at Snohomish High School in Snohomish, Washington on Wednesday, Dec. 13, 2023.  DECA is a national nonprofit for students interested in business. (Annie Barker / The Herald)
Hot off the press! Snohomish High School students create custom swag

New heat presses allow teens to make T-shirts, hoodies and gear at the school’s merch store, Panther Pause — with the copyright.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.