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
Gone will be the days when students and their colleges picked the lender that best fit their needs; instead, a federal bureaucrat will make that choice for every student in America based on still-unclear guidelines.
There's Washington, and then there's the rest of the country. This is the rest of the country….We don't want just any old jobs. We want our jobs.
Currently, students have the option to choose between private and public lenders, and I am a firm believer that such choice and competition among lenders is the best proven method for reducing costs and improving services. By omitting private lenders, we would create a monopoly within the federal government regarding student loans.
Finally, the government should disclose that getting your student loan will become about as enjoyable as going to the Department of Motor Vehicles.
Evidence
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5 Myths About Student Loan Reform
Campus Progress: Almost all of the student loan industry's warning about SAFRA were wrong.
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Are Student Loan Companies Playing Politics With People’s Jobs
The definitive refutation of “job killer” cry wolf claims regarding SAFRA.
