While SU students were away for a summer recess, the United States Congress was reacting to the investigation of New York state Attorney General Andrew Cuomo that flipped a decade-long trend in the business of student lending.

In the wake of Cuomo’s investigations, financial aid chiefs at schools across the country were forced to resign amid scandal, and the corporate giants of the student lending industry were left weakened.

Congress’ work has slowed as members have spent the month of August on a vacation of their own. Yet, each chamber managed to pass a reforming measure before July commenced. And as the fall term settles in, Senate and House of Representatives will reconvene to settle their differences in order to bring one bill to the president’s desk before the year’s end.

Of the 11,546 undergraduates at Syracuse University, 13 percent of students have private loans and 65 percent receive government loans, making the terms of this impending bill of paramount concern for the future of borrowing at this university.

Experts are confident the bill will be passed despite President George W. Bush’s disagreement with the loan forgiveness portions in each bill.

Financing college education has been a growing concern for years now. At SU, the cost of tuition and expenses for this school year was estimated at $45,280, according to the College Board. Nationally, the cost of obtaining a higher education has outpaced inflation by 40 percent since 2002.

The following charts contain key points of each version of the bill, along with the thoughts of Financial Aid Dean Christopher Walsh, which demonstrate the potential effects for SU students.

THE BILL IN THE HOUSE will…– Shift the support of the federal government towards government-sponsored loans and Pell Grants as opposed to private loans.- Cut $19 billion worth of subsidies to private lenders.- Halve the interest rate for government loans to 3.4 percent within five years. The current interest rate is 6.8 percent.- Increase the maximum award for a Pell Grant to $5,200 by 2011.- Create a loan forgiveness policy for public servants and other borrowers who faced 20 years of economic difficulties.

THE BILL IN THE SENATE will…– Drastically reduce tax subsidies to student lenders-by more than $18 billion-redirecting those funds to support federal government loans, at lower interest rates, to low- and middle-income students.- Limit the amount a borrower can pay back per month, in order to help graduates keep away from accumulating outstanding debt. That limit is set at 15 percent of a graduate’s income.- Create a loan forgiveness program for public servants.- Increase the maximum award for a Pell Grant to $5,400 by 2011.

SU FINAID DEAN WALSH says…– The bill won’t directly affect students, but it will increase the demand for student loans.- Private loans have actually been increasing each year and are ‘becoming more and more important.’- SU hopes the money being cut in subsidies will be redirected toward grants.- ‘It’ll save students money in the long run, particularly students from low-income families.’- The percentage of SU students with private loans and government loans won’t change too drastically.- The New York state attorney general’s efforts contributed to making ‘lending more efficient.’- SU’s chief concern in this matter is saving students money.

Published on August 28, 2007 at 12:00 pm