Add U.S. Sen. Barack Obama, D-Ill., to the list of those who want the new Democrat-controlled Congress to make major improvements in federal financial aid policy for low-income students.
Obama joined U.S. Sen. Edward Kennedy, D-Mass., on Monday to introduce legislation that would increase the maximum Pell Grant by 25 percent, to $5,100. The maximum grant has remained stagnant at $4,050 for the past four years.
“The dreams of our nation’s youth increasingly require a college diploma, but that diploma is becoming ever more difficult to attain,” said the first-term senator and likely 2008 presidential candidate. The problem is not lack of ambition but “lack of any realistic way” for many families to pay for college.
To pay for the changes, the Kennedy-Obama bill would encourage colleges to participate in the Direct Loan program, through which the federal government provides loans to students. Kennedy said this option is much less costly than the Federal Family Education Loan program that relies on the private sector.
Privately funded loans cost about $6 more per $100 loan compared with the Direct Loan program, he said. Once colleges switch to Direct Loans, they can keep their savings and use this money to provide higher Pell Grants.
Obama said he introduced his first bill on college affordability soon after being elected to the Senate because the topic had come up often in his state.
“As college costs increase, financial aid lags,” he said.
Obama is co-sponsoring a bill that would increase the top grant for needy students to $5,100 for the 2007-2008 academic year. The bill would add another $300 to the maximum grant annually until it reaches $6,300 by fall 2011. The chief sponsor is Kennedy, who is the chairman of the Senate’s Health, Education, Labor and Pensions Committee.
“It’s long past time for Congress to take action to address the crisis in college affordability,” Kennedy said.
Two decades ago, the maximum grant covered 55 percent of costs at a public four-year college, compared with 32 percent today. “It’s obvious we need to act immediately to make both college costs and student debt more manageable, and that is what this bill is all about,” Kennedy said.
The bill also would cut student loan interest rates in half, to 3.4 percent over five years. The House of Representatives last week approved a bill seeking a similar rate reduction.
While promoting affordability, the package also would affect what Kennedy calls the “basic life choices” of America’s youth. He says high college costs discourage many from careers in teaching, social work or law enforcement, which have lower salaries than other jobs not in public service.
The bill will “help reform our broken student loan system,” said Kennedy.
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