Federal

Bush Proposal Stokes Student-Aid Spat With Democrats

By Sean Cavanagh — May 08, 2002 3 min read

The debate among federal lawmakers over how students should pay for college—and how much the government is obligated to help them—boiled over last week. And some observers expect the intensity of the dispute to continue as tuition costs rise across the country and Congress inches toward next year’s sweeping review of postsecondary financial aid.

In a wave of public statements, including a press conference with students and teachers on May 2, Democrats attacked a proposal from White House budget negotiators to force students to consolidate college loans under a federally subsidized variable-interest rate, rather than a fixed rate. That suggestion, which the Bush administration appears to have backed away from, would have cost students thousands of dollars, higher education advocates argued.

But it might have saved the government up to $1.3 billion, according to some estimates—enough to cover a shortfall in the fiscal 2002 budget for the Pell Grant program, which helps low-income students pay for college. Some Republicans and student-loan lenders argue the current loan-consolidation structure favors wealthier borrowers rather than needy students entering college.

Just weeks earlier, the Bush administration and Congress sparred over Pell Grants, with federal lawmakers pushing to increase the per-student level of awards. The White House, in turn, said Congress was to blame for not adequately funding the program, and should first find money to make up the shortfall in this year’s program.

Squeeze on Families

Those controversies have emerged as studies suggest that higher education is becoming increasingly less affordable for low- and middle-income students.

A review released May 2 by the nonpartisan National Center for Public Policy and Higher Education, found that from 1980 to 2000, the percentage of family income taken up by college tuition rose for families from all financial backgrounds except those in the top 20 percent of income levels. Tuition at four-year public colleges and universities rose faster than family income in 41 states, according to the study, “A National Status Report on the Affordability of American Higher Education,” produced by the San Jose, Calif. research center.

A separate report put out by congressional Democrats last week argued that as many as 110,000 students planning to attend college next fall might not be able to afford it. Those estimates “reaffirm what the Democrats affirm—that this administration is leaving children and college students behind, and we will not tolerate that,” said Sen. Edward M. Kennedy, D- Mass.

Such aid programs are expected to face an overhaul when Congress begins the process of reauthorizing the Higher Education Act, a process scheduled for 2003.

“We’re getting kind of a sneak preview of what will go on during reauthorization,” said Brian K. Fitzgerald, staff director of the Advisory Committee on Student Financial Assistance, a Washington-based independent research organization that counsels federal officials on loan programs. “There will be a lot of concern about the amount that low-income students are forced to borrow.”

The administration’s proposal to eliminate fixed-rate loan consolidation drew criticism from some in higher education. A student with $17,000 in debt, for example, stands to save at least $2,800 by consolidating using current fixed-interest rates, said Ellynne M. Bannon, a higher education advocate for state Public Interest Research Groups, a consumer-advocacy organization in Washington.

The interest rate for federally guaranteed loans is expected to fall as low as 4 percent this year, offering students a prime opportunity for savings under a fixed system, she said. Under variable rates, many students would be forced to pay more on their loans during times when interest rates peak, paying less when rates dip.

While private lending companies might benefit, “This proposal would hit low-income students very hard,” Ms. Bannon said.

But one of those lenders, Sallie Mae, supports the proposal, said Kathleen M. deLaski, a company spokeswoman. The Virginia-based company owns and manages student loans, many federally guaranteed, for 5 million borrowers.

The current loan system is too heavily weighted toward subsidizing students already in the workforce, she said, rather than those first entering college.

A version of this article appeared in the May 08, 2002 edition of Education Week as Bush Proposal Stokes Student-Aid Spat With Democrats

Events

This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Student Well-Being Webinar
Equity, Care and Connection: New SEL Tools and Practices to Support Students and Adults
As school districts plan to welcome students back into buildings for the upcoming school year, this is the perfect time to take a hard look at both our practices and our systems to build a
Content provided by Panorama Education
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Classroom Technology Webinar
Here to Stay – Pandemic Lessons for EdTech in Future Development
What technology is needed in a post pandemic district? Learn how changes in education will impact development of new technologies.
Content provided by AWS
School & District Management Live Online Discussion A Seat at the Table: Strategies & Tips for Complex Decision-Making
Schools are working through the most disruptive period in the history of modern education, facing a pandemic, economic problems, social justice issues, and rapid technological change all at once. But even after the pandemic ends,

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Federal Lawmakers Press CDC About Teachers' Union Influence on School Reopening Guidance
Republican senators asked CDC Director Rochelle Walensky about reports a teachers' union had input on guidance for schools on COVID-19.
3 min read
Dr. Rochelle Walensky speaks during an event in Wilmington, Del., to announce President-elect Joe Biden's health care team on Dec. 8, 2020.
Dr. Rochelle Walensky, CDC director, speaks during an event in Wilmington, Del., to announce then-President-elect Joe Biden's health care team on Dec. 8, 2020.
Susan Walsh/AP
Federal Biden Taps Ex-Obama Aide Roberto Rodriguez for Key Education Department Job
Rodriguez served as a top education staffer to President Barack Obama and currently leads a teacher-advocacy organization.
3 min read
BRIC ARCHIVE
Getty
Federal Biden Pitches Plan to Expand Universal Pre-K, Free School Meal Programs, Teacher Training
The president's $1.8 trillion American Families Plan faces strong headwinds as Congress considers other costly administration proposals.
8 min read
President Joe Biden addresses Congress from the House chamber. Behind him are Vice President Kamala Harris and Speaker of the House Nancy Pelosi.
President Joe Biden addresses a joint session of Congress Wednesday night, as Vice President Kamala Harris, left, and House Speaker Nancy Pelosi of Calif., applaud.<br/>
Chip Somodevilla/AP
Federal Education Department Kicks Off Summer Learning Collaborative
The Summer Learning and Enrichment Collaborative will boost programs for students acutely affected by COVID-19 in 46 states.
2 min read
Education Secretary Miguel Cardona, left, talks with Fort LeBoeuf Middle School teacher Laura Friedman during a discussion on safely returning to schools during the COVID-19 pandemic on March 3, 2021.
Education Secretary Miguel Cardona, left, talks with Fort LeBoeuf Middle School teacher Laura Friedman during a discussion on safely returning to schools during the COVID-19 pandemic in March.
Greg Wohlford/Erie Times-News via TNS