The original stimulus bill passed by the U.S. House included a $2,000 increase in availability of Stafford student loans, but while “trimming pork” from the bill, the Senate cut a much needed provision from the final version.
The current credit crunch has already made tougher restrictions on private student loans, and will likely worsen. With large numbers of students dependent on private loans to get through school, someone needs to pick up the slack.
If there is no relief for college students it will result in a decrease in incoming freshmen, especially for colleges like Columbia, and, even worse, it would prevent currently enrolled students from finishing their education.
Although the Senate retained a provision that increased the availability of Pell Grants by $500, totaling $5,350 in 2009 and $5,550 in 2010, according to CNN.com, the increase in funds won’t result nearly as much as an increase in loans would.
In 2007, 2,914 students at Columbia received Pell Grants resulting in more than $7 million in aid, compared to 2,343 students who received private loans resulting in more than $38 million, according to the 2007 Columbia Fact Book. Those students who previously took out private loans may have trouble doing so in the upcoming years. Without easy availability of loans, students who don’t receive Pell Grants will find funding their education difficult. Even an increase in grants by a few hundred dollars for a few hundred students won’t have nearly the same effect as an increase in government loans would.
One thing many students can be thankful for is the American Opportunity Tax Credit, which would expand the already existing Hope Scholarship credit to $2,500 from $1,800, according to CNN.com. Although, this still wouldn’t result in as much money as loans would have been.
One argument against raising the availability of loans is that colleges will raise tuition. Although this may be loosely backed by historical evidence, the situation now looks as if the rule doesn’t apply.
The overall availability of loans has dropped recently because of private lenders tightening requirements for qualification. An increase in federal loans would only make up for part of the decrease in private loans. If this remains true, then the overall availability of money will still be less than it was in the past, which means it would be contradictory for colleges to raise rates.
With new student enrollment for Columbia decreasing compared to previous years, Columbia needs an increase in its availability of loans. And if Columbia maintains its policy to keep tuition increases under 5 percent annually, there shouldn’t be any reason not to raise loan limits.
Since the U.S. Congress agreed to drop this needed provision from the bill, another bill needs to be passed.