If a government proposal to increase federal student aid passes then students can look forward to increased college affordability at no new cost to taxpayers.
The Direct Loan Program
The Student Aid and Fiscal Responsibility Act of 2009, would face a House vote next week. The act proposes to run all new federal student loans through the Direct Loan Program starting in 2010. By this students would be allowed to borrow directly from the federal government and then they do not need to go through third-party lenders, such as banks, whose federal student-aid programs are subsidized by taxpayer money.
$87 billion would be saved by the plan
It has been said by the proponents that an estimated $87 billion would be saved by the plan over the next 10 years, which will then be invested in increasing federal student aid. In the Direct Loan Program Penn State has participated since 2008.
Savings Generated from implementation of the Direct Loan Program
With the savings that would be generated through the implementation of the Direct Loan Program, the bill has aimed at increasing Pell Grant scholarship amounts, lowering interest rates on need-based federal student loans, providing more access to the Perkins loan program and investing in support programs supporting college access and completion. In addition, by simplifying the Free Application for Federal Student Aid (FAFSA) form the bill will make it easier for families to apply for financial aid.
Students would be saved from Market Swings
Furthermore, U.S. Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, in a press conference call with college reporters has said that by keeping loan interest rates at 6.8 percent the Direct Loan Program would also protect students from any market swings that might affect interest rates.
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