Student loans and Congress

Federal funding of higher education as we know it today has its basis in the Higher Education Act of 1965. This legislation must be reauthorized every five years and is currently being debated in Congress. Media coverage of the debate often blurs into stories about fights over the overall budget reconciliation bills and Hurricane Katrina relief legislation.

Christine McGuire, the University’s director of financial assistance, spoke with BU Today about the history and possible future of federal student aid programs.

Q: What should be known or understood about the current pending legislation, and should the Boston University community be concerned?

I believe we should be very concerned about what is happening in Washington. Over the past 40 years the political climate has ebbed and flowed regarding the political will to assist the students of this country in pursuing higher education, but the trend has generally been one of genuine support of the important role our institutions of higher education play in our economy and the betterment of our society. However, the environment in Washington today is different, and support for funding has been quietly eroding over the past several years.

Q: What is the state of the Pell Grants?

The cornerstone of need-based grant programs, the federal Pell Grant program, has not had sufficient funding to increase the maximum award in the past several years. It has been stalled at $4,050. Many of the current bills and debates are discussing the authorized amount of the grant, but the authorized maximum is meaningless if there are not enough funds allocated to pay for the maximum award amounts. The past few years have seen modest increases in the allocation, but these increases have only been enough to fund prior-year shortfalls and new applicants into the program, and not enough to fund an increase to the actual annual maximum award.

Q: Is the Stafford Loan program in any better shape?

The federal Stafford Loan program’s annual loan limits have not been increased in approximately 15 years. They are the second largest expense of the student aid programs. Funding any increase to loan limits is extremely expensive. Increasing the loan limits has been a subject of the debate surrounding the reauthorization legislation, but current bills recommend only a very modest increase for first-year students, of only $875 annually. This stagnation in access to federally guaranteed student loans has contributed to the rapid increase of private credit-based loans for students, which has been the largest of all the student aid programs in the past several years.

Q: How about the status of federal work-study program funding?

Funding for two of the three campus-based programs — federal Perkins Loans and federal work-study — has declined for the past three years. On the federal level this cut has been approximately $120 million. This may not seem like much when compared with the overall federal spending of $28 billion on postsecondary education, but it translated on the local level to a reduction of approximately $2 million to Boston University over the past three years. The University, however, has worked to offset these reductions to minimize the impact on our students and therefore has incurred an increased burden on our budget.

Q: Should the BU community be concerned about the fate of these programs?

We should. As Congress is working on many different aspects of the delivery and funding of student financial assistance, all of us, as proponents, recipients, and purveyors of higher education, should urge our government to increase funding of postsecondary education. All current and future students who receive federal aid will be affected by any changes.