President signs College Cost Reduction Act
On Sept. 27, the College Cost Reduction and Access Act of 2007 (P.L. 110-84) was signed into law by President Bush. The legislation contains several enhancements for students and families, including a significant increase in funding for Pell Grants and reduced interest rates for new subsidized Stafford loans. Each of the enhancements was funded through the $20 billion in budget cuts to the Federal Family Education Loan Program (FFELP). This $20 billion in FFELP budget cuts took effect immediately on Oct. 1, 2007, only three days after the bill became law.
Upon signing the bill into law, the White House stated that the U.S. Department of Education "will closely monitor the effects of the bill’s provisions to ensure they do not cause unintended consequences, increase taxpayer costs, or upset the vital balance between the Federal Family Education Loan and Direct Loan programs."
A detailed summary of the provisions in the College Cost Reduction and Access Act of 2007 can be found on Sallie Mae’s Straight Talk site.
Higher Education Act set to move to the floor
On Nov. 15, the House Education and Labor Committee unanimously passed the College Opportunity and Affordability Act of 2007 (H.R. 4137), a bill that would complete the reauthorization of the Higher Education Act of 1965 after many years and multiple temporary extensions of the Act. H.R. 4137 incorporates language from the previously passed House version of Student Loan Sunshine Act, which includes a student loan code of conduct and requirements pertaining to preferred lender lists. Also included in the bill is a new streamlined Free Application for Federal Student Aid (FAFSA) application and provisions aimed at holding colleges and universities accountable for tuition increases.
The full House is expected to approve the bipartisan bill by an overwhelming margin, while the Senate passed its version, S. 1642, in July.
The House and Senate versions differ and will need to be reconciled and approved by both chambers before being sent to President George W. Bush for his signature, which could occur before adjournment in December or early next year.
NASFAA report comments on student loan auctions
A discussion paper (PDF, 80KB) prepared by the National Association of Student Financial Aid Administrators (NASFAA) discusses the PLUS auction program that is now part of the Higher Education Act, enacted into law by the College Cost Reduction and Access Act. The paper suggests that the government-administered auction of rights to originate Parent PLUS loans beginning July 2009 is "riddled with problems for both taxpayers and borrowers." Evaluating Student Loan Auctions (PDF, 80KB) also says that a student loan auction system would “likely result in market consolidations, fewer loan providers, fewer benefits for borrowers, and limited savings for taxpayers that will diminish over time.”