I apologize for the inconsistencies in my posts. It's been crazy at work with students trying to pay their bills to register, students applying for summer aid, and 2008-09 application processing. I have job security!
A while back I wrote about Senator Edward Kennedy's proposal for increasing financial aid opportunities. It's now official--he and others have created Senate Bill 2815, similar to that of the House's version HR 2815. The summary of the bill was a little more confusing, so I had to perform some research prior to this post. Here is the proposal in a nutshell:
- Unsubsidized federal student loans for dependent students would be increased by $1,000 (up to $4500 1st year, $5500 for 2nd year, and $6500 for 3rd and 4th years). The wording includes both Direct Loans and Stafford Loans. This doesn't address Subsidized loans, and there are students who qualify for just subsidized or a combination of unsubsidized and subsidized, so I don't know how this loan increase would come into play for those situations.
- The aggregate for the increase above would increase from $23,000 to $29,500 for the time a student is an undergraduate.
- For independent students or dependent students whose parents are denied the parent PLUS loan, annual unsubsidized loan limits would increase by $2,000. Remember, an independent student or student with a parent PLUS denial can ask for an additional unsubisidized loan amount, so limits would increase to $9,500 lst year (including Subsidized), $10,500 2nd year, and $12,500 for 3rd and 4th years.
- The total aggregate limit for the new loan limits would be $57,000 (up from $46,000).
- Allow parents to defer principal of federal PLUS loan.
- Provide $750 Pell Grant increase to low-income families who have a negative Expected Family Contribution (EFC) in the Federal Formula, or qualify for the Automatic Zero EFC.
- The Secretary will allow schools to request a Lender of Last Resort. This allows schools to offer a particular lender, funded by the government, for students who have difficulty securing a valid lender. Note: this only applies to Stafford Loans, not Direct Lending.
- The Department of Education will have authority to buy student loans from lenders who are no longer in the student loan business. This will help students to consolidate their Stafford Loans (not Direct Lending). There would not be any adverse charges passed on to the student.
If you read my last post, you'll notice that this is similar to the House proposal. Currently, S. 2815 has been referred tot he Committee on Health, Education, Labor, and Pensions. The intent of both bills to reduce dependency on private alternative loans. I'm don't think that will be the case with only $1,000 or $2,000 loan increases.
Now is the time to contact your federal legislators. I can't stress enough that you, as a voter, have the most power.