With the passage of the health care reform bill come changes that boost funding for higher education.
The Education Reconciliation: Student Aid and Fiscal Responsibility Act, found within the health care bill, eliminates the current practice of providing federal subsidies to private student loans, cutting out banks as the middleman. Instead, the government will supply loans to students directly.
The Congressional Budget Office estimates the act will save $61 billion over 10 years. A large portion of this money will be fed back into the educational system.
The Federal Pell Grant Program, which supplies need-based and low-income grants to higher education students, will receive $36 billion over a 10-year period. California is poised to see more than $1.5 billion in extra Pell Grant scholarships alone. From 2013 to 2017, the maximum grant will increase from $5,550 to $5,975.
Although the awards will be enhanced by over $400, some question whether the amplification will be enough to cover the discrepancy in inflated tuition costs.
“The increase in Pell [Grant] funds approved in the bill will definitely benefit our most needy student population and help subsidize some of the increasing cost,” said Trina Wiggins, UC Davis associate director of student services. “But it does not match the increasing tuition and fees at most institutions.”
In addition to Pell Grants, the College Access Challenge Grant Program, designed to cultivate relations among federal, state and local governments and philanthropic organizations by providing grants for low-income students entering higher education, will receive $750 million – $150 million each year until 2014. The Income-Based Repayment program will receive $1.5 billion, which caps monthly federal student loan payments at 10 percent of their income, as opposed to the present 15 percent, beginning 2014.
Community colleges, which currently enroll more than six million students, are reaping the benefits of the student aid initiative as well. The Community College and Career Training Grant Program, created to develop and bolster educational and training programs, will receive $2 billion. The act will provide $500 million to the program each year from 2011 until 2014.
UC Davis professor of law emeritus Martha West, who specializes in higher education, regarded the act’s allotment of funds as a wise choice.
“Community colleges have turned away lots of students because they don’t have enough classes to offer,” West said. “I think the government chose wisely. They did a pretty good job at targeting the sectors of higher education that need the money the most.”
Another such sector includes minority-serving institutions, which, over the course of 10 years, will see $2.55 billion from the Education Reconciliation Act. The money will be apportioned to various establishments, such as $100 million to Hispanic serving institutions, $85 million to historically Black colleges and universities and $30 million to Tribal colleges and universities.
UC Davis School of Education assistant professor Michal Kurlaender said the allotment of funds to community colleges and minority-serving institutions has much to do with the socio-economic status of many students enrolled in these institutions.
“Partly [this additional money] will help because many of the most financially vulnerable students attending postsecondary schooling are at community colleges, and minority students are also more likely to be lower income,” Kurlaender said.
Despite the billions of dollars in savings cutting out banks as private lenders has created, the entire $61 billion will not be doled back into the U.S. educational system. Portions of the funding, including $9 billion for deficit-reduction savings, will be going to other programs and back into the government itself.
The original student aid bill, previously concocted in the summer, stood to issue $87 billion in savings. Expenditures were drastically scaled down, including provisions for community colleges’ dropping from $10 to $2 billion and cutting out more than $20 billion for early education initiatives.
Nonetheless, Scott Lay, UC Davis alumni and president and chief executive officer of the Community College League of California, asserts that the act is a progressive step forward in educational funding.
“President Obama put students ahead of bank profits and used the savings to invest in Pell Grants, community colleges and minority-serving institutions,” Lay said. “While trimming of the full package at the end of the reconciliation process was disappointing, we can’t ignore the fact that this was the largest federal investment in higher education in history.”
KELLEY REES can be reached at firstname.lastname@example.org.