OHIO college students have a lot riding on a bill before the U.S. Senate that would revamp the financial aid market. If the Student Aid and Fiscal Responsibility Act is enacted, more Ohioans will be eligible for more money in the form of Pell grants. These grants are distributed on the basis of financial need, help pay for tuition and other college expenses, and do not have to be repaid.
A House-approved bill would eliminate the middleman in the college loan industry, so the U.S. Education Department, not individual private lenders, would issue federally guaranteed student loans. Banks now get a subsidy of about $75 a loan, backed by the government, to insulate them from risk.
The Congressional Budget Office says eliminating these payments would save $87 billion over 10 years.
The Obama Administration would put nearly half of the savings, $40 billion, into the grant program. The remainder would be used to give families a $10,000 tax credit for four years of college, and to increase funding for community colleges and early childhood programs.
Opposition to the measure, which passed the House on a bipartisan vote of 253-171, comes from banks and other lenders. It has taken the form of radio advertisements encouraging senators to vote no.
The financial industry's argument is that the switch will cost jobs. But the Education Department won't be servicing - that is, collecting on - its $550 billion student loan portfolio. Other companies will.
U.S. Education Secretary Arne Duncan calls this legislation "a staggering, once-in-a-lifetime opportunity" for Americans at a time when families are under financial duress and afraid they cannot afford to send their children to college or trade schools. It's also good for the country, which needs an educated, skilled work force.
Ohio Sens. Sherrod Brown and George Voinovich should vote yes.