• Background: Federal aid increased in 2007, some Republicans objected
• Debate: Affordable education v. Bad for students getting loans from banks
• Country Comparison: College is free in European countries except Britain
• Recent Legislation: 2007 College Cost Reduction Act

Background

• Federal Student Aid provides grants, loans and work-study programs for higher education. During the 2005-06 school year, the program granted $78 billion in new aid to nearly 10 million postsecondary students and their families.
• In September 2007, the U.S. House of Representatives and Senate approved a bill to expand student aid. The bill would increase the maximum Pell grant, which goes to the poorest college students, from $4,310 a year to $5,400 a year by 2012. Interest rates on federal student loans to poor and middle-class students would be cut from 6.8 percent to 3.4 percent over the next four years. The bill also sets up a loan-forgiveness program for college graduates who work for 10 years in public service professions and cap annual payments for students at a percentage of their income, keeping payments affordable. $750 million would be spent on federal budget deficit reduction to meet spending targets in the federal budget.
• Increasing aid to college student was one of the biggest domestic priorities Democrats set when they took control of Congress in 2007. All the lawmakers who voted against the bill were Republicans.

Debate

• Democrats say that no qualified student should be denied a college education because of cost. The cuts in subsidies to banks are aimed at excessive giveaways to lenders. These subsidies were established to provide incentives for banks to make college loans.
• Critics say that students will go back to paying the higher rate in four years or taxpayers will have to endure the burden. Banks argue that the cuts will affect their ability to provide services to borrowers.

Country Comparison

• Higher education in Europe is free, except in Britain where university fees are approximately £3,000 a year.

Recent Legislation

• College Cost Reduction Act of 2007.