Aid bill provides big boost to students

By Liz O'Brien

Despite initially threatening a veto, last Thursday President Bush signed a bill that provides the largest increase in student aid since the 1944 GI Bill and redirects $20 billion in subsidies away from banks and student loan providers and into the hands of students.

In addition to redirecting funds, the College Cost Reduction and Access Act will also cut the current 6.8 percent interest rate on Stafford Federal Student Loans in half over the course of five years, allowing for more manageable loan repayment. This is welcome news for roughly 41 percent of Santa Clara students receiving need-based financial aid, many of whom will receive a higher dollar amount in their next Pell Grant.

"I think every little bit counts," said junior Brady Pivirotto, adding that he receives a significant amount of grants and scholarships and will also be paying off student loans. "In some situations, there's a person who might not be able to go to college and that extra $100 might push them over the line. I know a lot of students who turned down four-year schools right out of high school because they just couldn't afford it."

The act, which the Bush administration initially opposed, was presented to Congress over three years ago, and finally signed last week after fervent lobbying from senators, house representatives and the Campaign for America's Future, an organization that places issues of falling wages and rising insecurity at the center of national debate.

The passage of the act will most immediately impact students who hold Pell Grants, which are government-provided, need-based grants available to both undergraduate and graduate students that are not repaid. The act will increase the dollar amount available to Pell Grant recipients by reducing the money given to student loan lenders.

"What they're doing is, they're taking the subsidies away from private lenders and they're reasserting it back into funding programs such as the Pell Grant. So this will be of no cost to taxpayers," said Alex Carter, a policy research associate for the Campaign for America's Future.

Currently, Pell Grant recipients can receive a maximum of $4,050 per year. As a result the act, that will increase to $5,400 per year by 2012. The number of Pell Grant recipients at Santa Clara is low compared to other colleges and universities in California. Only about 10 percent -- or about 458 -- of Santa Clara students are recipients, whereas many UC schools claim 30 to 40 percent of students as Pell Grant recipients. Santa Clara distributed $1.3 million in Pell Grants last academic year.

"It's not a huge group, but they're still needy students," said Trista San Agustin, associate director of student loans in the Financial Aid Office.

One of the goals of the act is to increase accessibility to higher education for families that could not normally afford college. San Agustin, however, does not see a major change in demographics at Santa Clara as a result of the act.

"I think it's really more so going to ease the burden on the same group of people as opposed to bringing in new students," she said.

The state of California, which is home to almost 400 colleges and universities, will receive over $2.4 billion in additional grant aid over the next five school years. The total amount dispersed by the act -- $20 billion -- is divided between all 50 states over the next five years.

"$20 billion sounds like a lot of money, but when you look at the number of students that it's going to, and the cost of attendance at Santa Clara â?¦ it really averages out to something like a couple hundred dollars a year," San Agustin said. But for some students, the increase could make college more accessible, she said.

"When you're looking at $40,000 a year and looking at maybe $200 more in financial aid for that year, it's not going to be huge, but over the long period of four years that might be $1,000 or a little bit more that you didn't have to borrow in a loans," Agustin said.

Another major piece of the legislation concerns interest rates on student loans. Students who have subsidized loans, or loans provided by the government, do not pay interest on what they have borrowed while they are still in school. Once borrowers have graduated, they are subject to a 6.8 percent interest rate. The new act will cut that percentage to 3.4 over a five-year period, allowing students to pay their loans off at a more manageable rate.

"I know people that pay close to 35 percent of their income just to their student loan payments," said Carter. The act guarantees that student borrowers will never spend more than 15 percent of their yearly income on loan repayments.

The Associated Press contributed to this story. Contact Liz O'Brien at (408) 554-4546 or eobrien@scu.edu.