Bush cuts loan rates, ups Pells

Jackie Valley

President Bush signed a student aid bill into law yesterday that aims to help needy students by increasing the maximum Pell Grant and cutting student loan interest rates.

The bill, passed in Congress earlier this month, raises the maximum Pell Grant from $4,310 to $5,400 over the next five years – an increase of $1,090, or roughly 5 percent per year.

Mark Evans, director of financial aid, said the Pell Grant increase will help the 25 percent of Kent State students who receive them.

Evans said the bill will also cut student loan interest rates in half, at no cost to taxpayers, by lowering federal subsidies to the $85-billion student loan industry.

According to the Committee on Education and Labor Web site, the new student loan interest rates will save the average student $4,400 over the life of the loan.

In addition, the student loan portion of the bill will put a 15-percent cap on the amount of discretionary income used toward loan repayment.

The bill also offers loan forgiveness after 10 years for students who work in public service professions, such as teaching, law enforcement and the military.

Rahm Emanuel, D-Ill. and House Democratic Caucus Chairman, said the College Cost Reduction and Access Act represents the largest increase in student aid for higher education since the GI bill in 1944 – reflecting the success of one democratic campaign goal.

“This could have been done before, but prior Congresses didn’t do it,” he said. “This Congress did it.”

David Creamer, senior vice president for administration, said the changes are more important to students in high-tuition states such as Ohio, and especially to students at Kent State, who tend to come from lower income families.

Creamer said 87 percent of Kent State’s students receive a type of financial aid, which could be Pell Grants, student loans or a combination of the two.

“That’s a very high proportion of our students affected by financial aid,” he said, adding Kent State’s number is higher than comparable state universities, such as Miami University and Ohio University.

Even so, Creamer said the increase in Pell Grant funding is not very significant because the 5 percent increase per year just keeps pace with the growing costs of attendance.

“If you looked across the country, tuition keeps going up about four or five percent per year,” he said. “Students aren’t really being helped more than they are today.”

Still, Evans feels the bill will act as a road map to increase Pell Grants over time.

“There are a number of positive things happening collectively,” he said. “All are small changes that put families in better position to afford college.

“The bill is significant in terms of the amount that has been invested in it.”

President Lester Lefton said while he thinks the bill makes up lost ground concerning higher education affordability, he thinks providing more incentives for student loan forgiveness will ultimately help society, too.

“I think you want to incentivize the system,” he said. “You shouldn’t have to wait 10 years to get loan forgiveness.”

Still, Creamer said the bill is a step in the right direction.

“In a relative sense, it is a good news story,” he said. “It’s just not as much good news that is needed.

“At some point, we need to make quality higher education at a more affordable price to students.”

Contact student affairs reporter Kristine Gill at [email protected] and administration reporter Jackie Valley at [email protected].