Washington Week: Student Voices (O)

Senator pushes bill to increase Pell Grant
By Garesia Randle
The Daily Reveille (LSU)
02/26/2007

(U-WIRE) BATON ROUGE, La. — Sen. Edward Kennedy, D-Mass., and other members of the U.S. Senate Health, Education, Labor and Pensions Committee have long debated the significance of making college more affordable for low-income students. And this year they may be a few steps closer to making that debate become a reality.

The committee is pressing forward to pass bills that will increase the maximum Pell Grant amount to $5,100 and cut interest rates in half from 6.8 percent to 3.4 percent for new subsidized undergraduate loans over five years.

In a recent funding resolution, the maximum Pell Grant has already slightly increased by $260 from $4,050 to $4,310. This is the first Pell Grant increase Congress has passed in four years.

According to the College Board's Trends in College Pricing 2006, the purchasing power of the maximum Pell Grant has declined to only covering 32 percent of the cost today to attend a public four-year institution. It covered 55 percent of the costs 20 years ago.

In a Feb. 16 news release, Kennedy said the rising costs of college tuition and stagnant Pell Grant amounts is keeping 400,000 qualified students from attending a four-year college.

"In a word, it's a crisis that's tarnishing the American dream for millions. And we, in Congress, can't ignore it any longer," Kennedy said in the news release. "A major cause of the problem is cost. The cost of college has more than tripled in the past 20 years, and federal aid hasn't kept up."

Luke Swarthout, higher education advocate for the U.S. Public Interest Research Group, said he thinks more should be done to help college become more affordable but commends Congress for taking on the issue.

"The Pell Grant has been standing at $4,050 for the past four years. But despite that, $260 is a meaningful increase," Swarthout said. "Of course this small increase will not recover the purchasing power lost of the years. But Congress is working with a particularly tight budget."

Melissa Wagoner, press secretary for Sen. Kennedy, told The Daily Reveille the bill has to go through the congressional process, but the Senate hopes it will soon be passed. "It has to go through the committee process first," Wagoner said. "But [the Senate] hopes to have the bills pass by late spring or early fall."

In a news release Kennedy said loan interest rates need to be cut to work in the best interest of the students and not the banks and lenders who provide the loans.

"Forty years ago subsidies were needed to persuade lenders to take part," Kennedy said in the news release. "But today's federal subsidies make student loans the second most profitable business for banks, after credit cards. Something's obviously not right."

But there has been some criticism that decreasing the interests rates will cause lenders to be less willing to participate in providing funds for students' educations.

Swarthout said he thinks that outcome is unlikely since banks are such lucrative businesses.

"They will make a slightly less profit. But they make so much of a profit, they will be able to bare this," Swarthout said. "We ought to be designing our loan programs to make them more affordable for students instead of putting more money in the pockets of lenders."

Some say cutting interest rates for new loans is delayed progress and will not help graduating students like Alisha Batiste, who will soon have to begin paying subsidized loans back at the present interest rate.

Batiste, secondary education senior, said although she does not need to take out loans anymore, the bill would have been a great help to her had it been passed when she first began her college career.

"When I did take out loans, that would have been beneficial for me. But it won't do much for me now that I am about to graduate," Batiste said, shrugging her shoulders. "I think Congress moves as fast as they do with anything else. People are still over there fighting a war. But [the government] seems like they don't have a rush for anything."

Clayton Alfonso, biology sophomore, said Congress passing a bill to cut back on loan interest rates would be a great help for him, especially since he plans to further his education.

"I plan on pulling the full amount of the Stafford loan that I will get for the next two years. And I plan on going to medical school," Alfonso said. "So any break I can get with having to pay back the interest that has accrued from the money I borrowed would be great."

[ Back to Student Voices ]