Student Aid and Fiscal Responsibility Act

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.

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From the Wall Street Journal's anti-SAFRA op-ed "The Quietest Trillion".

Legislation passed by the U.S. House of Representatives, however, would require all federal student loans to be originated by the federal government, jeopardizing hundreds of private sector jobs in Wilkes-Barre and hampering related economic development in the state. Sallie Mae currently contributes more than $40 million annually to the local economy and has contributed millions to local charities.

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Industry press release from the Pennsylvania branch of Sallie Mae.

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.

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Albert L. Lord, Sallie Mae's CEO, Chronicle of Higher Education.

For decades, Sallie Mae has done great work to support millions of students and families and that is felt right here in Central Indiana through employment opportunities and economic development. With unemployment in our region at more than 10 percent, these are jobs we can’t afford to lose.

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Scott Faultless, President of the Fishers Town Council.

Evidence