Student Aid and Fiscal Responsibility Act
The Student Aid and Fiscal Responsibility Act (SAFRA) of 2010 ensures that all federally funded student loans will be directed through the federal government’s Direct Loan Program (DLP,) saving taxpayers $61 billion and using that money to fund the rest of the bill. It abolished the Federal Education Loan Program (FFELP)—which used publicly subsidized private loan companies to provide student loans.
SAFRA provided the Pell grant program with an infusion of $36 billion (over 10 years), increasing the maximum award to $5,550 in 2011. SAFRA also ensures the program’s benefits will now grow with inflation every year, plus one percent. SAFRA makes student loan interest rates variable, but caps interest rates at 6.8 percent to protect borrowers from unreasonably high rates.
SAFRA also increased funding for community colleges ($2 billion in available grants).
Cry Wolf Quotes
The furor over President Obama's trillion-dollar restructuring of American health care has left his other trillion-dollar plan starved for attention. That's how much the federal balance sheet will expand over the next decade if Mr. Obama can convince Congress to approve his pending takeover of the student-loan market.
The President's plan, although touted as a means of promoting higher education, is not. The plan does not reduce the cost of student loans for a single student. Students and parents need to know that under this proposal, the government's profits on student loans borrowed by middle income students will be used to finance other student aid.
Ultimately, what they are trying to create here is the Post Office of student lending — you've got no choice.
As the national struggle to deal with a severe economic crisis and a national unemployment rate of 8.1 percent — the highest level since 1983 — it is a critical time to reinforce successful solutions, not abandon them. Ensuring the continuation of thousands of jobs for individuals singularly focused on helping millions of students enter and succeed in higher education is a “win-win” in today’s deeply stressed economy. It preserves jobs for the workers of today, while guaranteeing access to aid to millions of students whose skills will help maintain the nation’s pre-eminent place in the global economy.
Evidence
-
5 Myths About Student Loan Reform
Campus Progress: Almost all of the student loan industry's warning about SAFRA were wrong.
-
Are Student Loan Companies Playing Politics With People’s Jobs
The definitive refutation of “job killer” cry wolf claims regarding SAFRA.
