Student Loan Blog : President Bush

Colleges Want Piece of Federal Government’s “Bailout Pie”

Student Loan Girl — Thu, 20 Nov 2008 23:17:00 GMT

With 39 states anticipating budget shortfalls next year totaling more than $100 billion, colleges are urging Congress to include them in a second economic stimulus bill currently being drafted, The Chronicle of Higher Education reports (“As the Economic Crisis Hits Home, Colleges Seek Help From Congress,” Nov. 13, 2008).

Hard hit by the deteriorating economy and financial markets, many schools are dealing with declining endowments, reduced support from the state, and higher numbers of financially needy students. To help schools overcome these challenges, college lobbyists are asking Congress to include funds for financial aid, research, and infrastructure as part of the new economic-stimulus bill.

The Association of American Universities and the American Association of Medical Colleges are specifically lobbying Congress for more money for research, emphasizing the ways colleges support the economy by creating new jobs, graduating work-ready students, and promoting business development.

In a recent letter from the AAMC quantifying its claims, the organization stated that medical colleges were responsible for about 3 million jobs, $20 billion in state tax revenue and injected $451 billion into the economy last year.

Billions Requested by College Associations

Many college associations representing a wide array of interests have petitioned Congress for several billion dollars, each for distinct purposes:

The AAMC is requesting $1.9 billion for the National Institutes of Health.
The American Association of State Colleges and Universities and the Student Aid Alliance are asking for more than $5 billion to make up for a projected shortfall in Pell Grant funding and for Congress to provide enough funding to meet a recently passed $500 increase to the maximum Pell Grant award.
The Association of American Universities wants bailout money set aside for campus construction projects that have halted across the nation.

In their pursuit of funds, schools are competing with state governments, as well as the ailing airline and auto industries. And with the transfer of power on January 20, 2009 from the current Bush administration to the Obama administration, schools may have to wait until February or later to see if they get the capital infusion they seek.

With so many urgent needs confronting Congress — including the possible collapse of Ford, Chrysler and GM, and the loss of millions of jobs if the automakers don’t receive $25 billion in emergency government loans — colleges realize that they aren’t likely a top priority to receive government aid, the Chronicle suggests.

Cynthia Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities said, “There are so many people going to the trough who have legitimate needs that it’s going to be hard.”

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Sex Offenders May Lose Pell Grant Eligibility Under Revised Higher Education Act

Student Loan Girl — Mon, 04 Aug 2008 23:49:00 GMT

Starting July 1, 2009, sex offenders confined in treatment centers throughout the country may no longer be eligible to receive need-based federal Pell Grants, under a new provision of the reauthorized Higher Education Act, according to an article in the Associated Press (“Congress Cuts Off College Aid For Sex Offenders,” Aug. 4, 2008).

President Bush has yet to sign the act into law, but after the act passed through Congress July 31, Rep. Ric Keller, R-Fla., said, “Today, the most insane wasteful spending program in America comes to an end.”

Keller cited an AP article from March that revealed dozens of rapists and child molesters had taken higher education classes at taxpayers’ expense while confined to treatment centers after serving their prison sentences. Some prisoners were using the financial aid to buy clothes, DVD players, and music CDs even after they had dropped their classes in some cases.

While the U.S. Department of Education does not know exactly how many sex offenders receive Pell Grants, spokeswoman Stephanie Babyak predicted that making sex offenders ineligible for the aid would save taxpayers millions.

Critics say the new measure may rule out a higher education for sex offenders who are trying to rehabilitate themselves. Instead of cutting off grant aid to all sex offenders, Congress should better regulate how it administers the program in order to help prevent abuses, said Michael Macleod-Ball, chief legislative and policy counsel for the American Civil Liberties Union.

The grant aid provision would affect the 20 states that allow violent sex offenders — those who it is believed would likely repeat their crimes if they were to be released — to be held indefinitely in treatment facilities after they have served their prison sentences. Prison inmates have been ineligible for Pell Grants since 1994, but sexual offenders can qualify for the grants once they are transferred from prison to treatment centers.

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President Bush Signs Legislation That Boosts Availability of Student Loans

Student Loan Girl — Thu, 08 May 2008 16:15:00 GMT

On May 7, President George Bush signed into law legislation intended to help stabilize the $85-billion student loan industry and to avert a predicted shortage in student loans.

The law will allow the U.S. Department of Education to buy bundled student loans that lenders have been unable to sell to investors. Sales of these loans will create capital to help lenders make new loans.

In addition, the measure will allow the Education Department to loan federal money to guarantee agencies, so those agencies can issue student loans, if necessary, under the “lender of last resort” system,” according to an article in The Chronicle of Higher Education (“Bush Signs Student-Loan Bailout Bill Into Law,” May 7, 2008).

The new law is expected to simplify that system, under which students who have been denied student loans can petition the government as a last resort, by allowing the Secretary of Education to designate an emergency lender for an entire school instead of on a student-by-student basis.

Rep. George Miller, D-Calif., chairman of the House education committee and a chief backer of the legislation, said the passage of the bill should send a strong message to the public (“Bush Signs Student Loan Market Stabilization Plan,” Reuters, May 7, 2008).

“With this bill signed into law,” Miller said, “students and families now have every assurance that they will continue to have access to all the federal student loans they are eligible for, no matter what happens in the nation’s financial markets.”

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