JULY 17, 10:40 A.M. – The rippling effects of the investigation by New York State Attorney General Andrew Cuomo have reached the nation’s capital as the House of Representatives passed a bill that will revamp the student lending landscape.

Students entering college in fall 2008 will be the first class to face the changes, which shift the support of the federal government towards government-sponsored loans and Pell Grants as opposed to private loans. The bill would cut $19 billion worth of subsidies to private lenders, while halving the interest rate for government loans to 3.4 percent within five years. The current interest rate is 6.8 percent.

The maximum award for a Pell Grant, financial aid provided to students based on the Free Application for Federal Student Aid (FAFSA), would increase to $5,200 by 2011.

And while this stage of the legislative process is still early, The New York Times reported the bill will likely become law later this year. The Senate will debate on a similar bill later this month and, though President George W. Bush does not support the bill completely, it is expected that he will sign it into law.

Financing college education has been a growing concern for years now. At Syracuse University, the cost of tuition and expenses for the upcoming school year is an estimated $45,280, according to the College Board. Nationally, the cost of obtaining a higher education has outpaced inflation by 40 percent since 2002.

SU’s Dean of Financial Aid, Christopher Walsh, said the bill won’t directly affect students, but it will increase demand for student loans.

The powerful lobby of the student-lending industry has argued that students will face the consequences of reduced services and discounts.

That could become a hassle for SU students with private loans. Walsh said private loans have been increasing each year and are ‘becoming more and more important.’

Of the 11,546 undergraduates at SU, 13 percent of students have private loans and 65 percent receive government loans. Walsh doesn’t think these numbers will change too drastically following the passage of the legislation.

He said the chief concern was saving students money.

‘We are always very interested in programs that are efficient,’ he said, adding he hoped the money being cut from lenders would be redirected toward grants.

Walsh summarized the bill’s overall affect rather simply.

‘It’ll save students money in the long run,’ he said, ‘particularly students from low-income families.’

Republicans who voted against the bill characterized it as creating new entitlement programs, according to the Times. The bill includes a loan forgiveness clause for public servants and borrowers who faced 20 years of economic difficulties.

Cuomo’s investigation took down financial aid chiefs at schools across the country and weakened many of the giants in the student-lending industry. This bill temporarily put the sale of the higher education loaner Sallie Mae on hold, as the future has quickly become hazy for lenders.

Walsh dismissed the notion that the bill was a direct result of Cuomo’s campaign, but attributed the state attorney general’s efforts with making ‘lending more efficient.’

But as the policy deals are being hampered out in Washington and the attorney general is cracking down on corrupt in the lending industry, tuition bills are arriving in the mail boxes of the student body.

Published on July 24, 2007 at 12:00 pm