Congresswoman Lucille Roybal-Allard voted today (9/17/09) to make the single largest investment in aid to help students and families pay for college in history -- and at no cost to taxpayers. The Student Aid and Fiscal Responsibility Act (SAFRA) (H.R. 3221) will boost Pell Grant scholarships, keep interest rates on student loans affordable, and create a more reliable and effective financial aid system for families.

The legislation, which now awaits passage in the U.S. Senate, passed the U.S. House of Representatives today by a vote of 253 to 171.

“The Student Aid and Fiscal Responsibility Act expands affordable, quality, educational opportunities for students by boosting early education, strengthening community colleges and training programs, and significantly increasing government grant and loan assistance for college tuition payments,” Congresswoman Lucille Roybal-Allard said.  “Making sure our young people have the ability to attend college or get career training is a critical step toward rebuilding the American economy and ensuring that our country’s workforce remains strong and competitive for many years to come.” 

The Student Aid and Fiscal Responsibility Act makes the following investments to make college affordable and help more students graduate:
• Invests $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2011, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent.
• Invests $3 billion to bolster college access and completion support programs for students. It will increase funding for the College Access Challenge Grant program, and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
• Strengthens the Perkins Loan program, a campus-based program that provides low-cost federal loans to students, by providing the program with more reliable forms of credit from the federal government and expanding the program to include significantly more college campuses.
• Keeps interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012.
• Makes it easier for families to apply for financial aid by simplifying the FAFSA form. Building on proposals recently put forth by the Obama administration, the legislation will dramatically cut down the number of questions on the form by allowing students and families to apply for aid using the information on their tax returns.
• Invests in Historically Black Colleges and Universities and Minority-Serving Institutions, through 2014, including programs that help low-income students attain degrees in the fields of science, technology, engineering or mathematics by the following annual amounts: $100 million to Hispanic Serving Institutions including $10 million for community partnerships; $85 million to Historically Black Colleges and Universities; $15 million to Predominantly Black Institutions; $30 million to Tribal Colleges and Universities; $15 million to Alaska, Hawaiian Native Institutions; $5 million to Asian American and Pacific Islander Institutions; and $5 million to Native American non-tribal serving institutions.
• Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to low-cost federal college loans, in any economy.

According to the Congressional Budget Office, the Student Aid and Fiscal Responsibility Act will save taxpayers $87 billion over 10 years.  The savings generated by switching to the cheaper Direct Loan program will then be redirected to fully pay for the federal funding increases to the other educational programs.