Durbin, Roosevelt students tout hike in Pell Grants
By Francine Knowles
Students at Roosevelt University welcomed the overhaul of federal financial aid program, approved last week as part of the health care reform bill. They say the $61 billion in savings from the changes will help more students like themselves achieve the American dream of a college education.
Sen. Dick Durbin (D-Ill.), who joined with Roosevelt students to
discuss the changes here Monday, said the legislation will aid 8.5
million students nationally and 265,000 in Illinois by providing them
friendlier loan repayment terms and boosting funding for Pell Grants.
WHAT CHANGESThe reform bill takes private lenders out of the business of originating student loans. Instead the government will lend to students. The expected $61 billion in savings over 10 years would:
• Boost Pell Grants by $36 billion.
• Provide $2 billion for community colleges.
• Provide $2.5 billion for historically black colleges and universities and institutions serving minority communities.
• Direct about $19 billion to reducing the deficit and offsetting expenses in the health care legislation.
Beginning in 2014, the bill caps monthly loan repayments at 10 percent for college graduates with certain income and family sizes. The current cap is 15 percent. Any remaining balance would be forgiven after 20 years of repayment, down from the current 25 years.
For example, a borrower with $40,000 in student loans and an adjusted gross income of $30,000 a year could see their monthly payments drop from $172 in the current income-based plan to $115 a month. That compares to $460 under the standard 10-year repayment program.
Public service workers, such as teachers, nurses and those in military service will see any remaining debt forgiven after 10 years.
"I'm really excited about it," said Alexander Sewell, a junior at Roosevelt and student government president. He said he receives about $7,000 in Pell and other grants annually.
"I wouldn't be able to finance my college education without the Pell Grant," he said. "I think it will have a tremendous impact in granting access. It will have an amazing impact because people are worried about tuition increases."
Previously from banks
The student loan program overhaul passed in the shadow of the health-care law is meant to cap repayments, expand lending and provide more money for minority colleges and universities.
Previously the government paid private lenders to make student loans with government money. The government also guaranteed the loans, which commercial banks made profits off of through higher interest rates, while the government assumed most of the risk.
"This was a bad idea, to allow the banks to step in and add to the cost of student loans, so that these students would end up more in debt didn't make any sense at all," said Durbin. "And then to say to the banks it's a no-risk situation . . . that really is not fair to the students. It's not fair to taxpayers."
Under the measure President Obama is expected to sign today, the government will handle the loans itself through its direct-loan program starting this year. By excluding the banks, the government expects to save an estimated $61 billion over 10 years -- $36 billion of which will be used to help boost Pell Grants.
Illinois will get an additional $313.5 million for raising the maximum annual Pell Grant scholarship to $5,550 this year and to $5,975 by 2017. Last year, the maximum was $4,800, said Michael Dessimoz, associate vice president for Enrollment Services at Roosevelt.
At Roosevelt, 1,400 out of 2,800 full-time undergraduate students receive Pell Grants, said Charles Middleton, university president. The increased money will support 23,720 more students across the state, according to Durbin's staff.
Durbin said change was needed, noting 30 years ago a Pell Grant could cover 77 percent of public college costs, but today it covers only 30 percent. To fill in the gap, students have taken out student loans. In the early 1990s, not quite a third of college graduates had loan debt. Now more than 70 percent do at an average of more than $20,000 per student, according to Durbin's staff.
Roosevelt junior Griselda Romero said the increase in grant funding is needed, particularly given the high unemployment rate. She received $2,600 in Pell grant funding this semester and had worked two part-time jobs to help fund her education. Now she only works one job, because one of her employers folded."It's great that they're increasing this because jobs are really hard to find right now," she said.