Student Aid Act adds to Pell Grant

Anthony Holloway

Students could see a $200 increase in Pell Grants and changes in the Federal Perkins Loan Program pending the passage of the Student Aid and Financial Responsibility Act of 2009.

The increases and changes would come from the savings made by getting rid of the Federal Family Education Loan system and instating universal application of the Federal Direct Loan system, which Kent State already uses. The Congressional Budget Office estimated government savings of $80 billion.

Mark Evans, director of financial aid at Kent State, said the SAFRA offers students at Kent State and the rest of the nation a chance to “finance higher education” by reinvesting the savings, benefiting Kent State students in two different ways.

Increasing Pell Grants

Evans said the maximum Pell Grants award could increase by $200 – to $5,550 – for the next school year, and an additional $200 would be added each following year. A definite dollar amount, though, is still unknown.

“Any increase is a welcomed increase,” Evans said.

Nanci DiBianca, director of the National Education Association, said the proposed increase would take the maximum Pell Grant amount to $6,900 by 2019.

Evans said, as of Fall 2009, 13,237 students receive a Pell Grant, amounting to $26.2 million.

The Pell Grant ranges from $609 to $5,350. The government determines the award amount based on financial need, which it evaluates based on the Free Application for Federal Student Aid.

Changing the Federal Perkins Loan Program

Evans said there are two big changes in the Federal Perkins Loan Program:

&bull Fund availability:

Evans said schools fund the FPLP through the payments students make into the program.

“The federal government hasn’t given out any new money to loan out in this program for about the last five or six years,” he said. “Our peak in order to lend out in the Perkins Program hit a $6 million mark about four or five years ago.”

Evans said the proposal would allocate $6 billion into FPLP.

“If the federal government puts $6 billion into this new program, I haven’t seen the estimates of the impact it would have at Kent State, but across the country,” he said, “it would make a significant impact on helping families finance higher education.”

The “new program” Evans mentions is the second change to the FPLP.

&bull Unsubsidized Perkins Loan:

In the proposed Unsubsidized Perkins Loan Program, he said there is “a shift on the responsibility of the interest, the in-school interest period from the government to the student and family.”

He said it is possible, yet not definite, that the subsidized Perkins Loans, where the government is responsible for the interest, could be phased out by June of next year.

Evans said it would be beneficial to students.

“The interest rate and repayment terms would be significantly better than the majority of the private educational loan programs that are out there,” he said.

DiBianca said the new loan program would make “student loans more affordable.” She said the average student loan rate for a private loan is 16 percent.

Legislation Status

“The jury is still out,” Evans said, referencing the legislation’s position in an undecided Senate.

DiBianca said the legislation flew through the House of Representatives but is stagnant in the Senate.

DiBianca said she meets with Ohio Congressmen like George Voinovich, and that they know the importance of the SAFRA.

“They know they need to keep the best and the brightest in our country and in our state,” DiBianca said.

Contact Student Finance Reporter Anthony Holloway at [email protected].