Paying for college can be even more of a struggle than getting in, but new legislation might make it a little easier for families by increasing federal financial aid. Last month Congress passed the Financial Student Aid and Fiscal Responsibility Act. The legislation expands financial aid, shifts direct federal lending and removes subsidies to private lenders. Supporters have claimed that the bill would save taxpayers $87 billion over the next 10 years. The legislation promises to make college more affordable, but what does that mean for you and your family?
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The act will simplify the student loan process and secure more affordable interest rates. The Financial Student Aid and Fiscal Responsibility Act eliminates the Federal Family Education Loan program, which encourages private lenders to make loans by providing subsidies and guarantees. Student loan debt now averages about $23,000. The act will cap interest rates and help to diminish the growth of student debts. This improvement in financial aid will help middle and lower-class families, but will still leave students paying off college debt long after they graduate.
Additionally, the legislation increases the maximum Pell Grant. The Pell Grant is a need-based grant offered to lower income students based eligibility as determined through the FAFSA. Unlike a loan, the Pell Grant does not need to be repaid. Federal grants have been lagging behind the quickly rising cost of college, but the Act aims to change that by increasing the potential Pell Grant award, from $5,350 in 2009 to $5,550 in 2010 and $6,900 in 2019. Unfortunately, with the cost of a public four-year college averaging $7,020, these loans can still leave students with great debt, especially when cost of living is considered. Furthermore, increasing the Pell Grant does nothing to help middle-income families who are often caught between being ineligible for aid and not having the income to pay for college.
College students aren’t the only ones who will benefit from this legislation. The act also sets aside funds for renovation and construction of public schools and community colleges, improving the quality of education for students at all levels of schooling.
The Student Aid and Fiscal Responsibility Act is a step forward in improving financial student aid and making college more affordable. Though it will not make paying for school easy for all families, it will certainly help.
Do you have any insight into the Financial Student Aid and Fiscal Responsibility Act? Any tips on how to pay for college? Leave a comment and let us know.