The College Aid Crisis

Almost two weeks ago, we posted an interview with Richard Kahlenburg of the Century Foundation who said that low income students were being kept out of college in large numbers because they couldn’t afford it and grant programs had been cut to the bone by a Federal govt that wasn’t interested and state govts that were already severely strapped by the Federal pull-out from its responsibilities. Today the NY Times editorial board weighed in.

Published: May 25, 2004

Nearly a half-million Americans will be turned away from four-year colleges this year for financial reasons, thanks to rising tuition costs and declining state and federal aid for low- and middle-income students. Congress should modify the federal college loan system to deal with this problem. A proposed bill would save billions of dollars that could then be redirected into grants for tuition aid.

Right now there are two basic college loan programs. The direct loan system, which actually makes a small profit, allows students to borrow from the government through their schools. Under the vastly more expensive Federal Family Education Loan Program, private banks receive federal subsidies to make government-backed student loans. Colleges can participate in only one of the two systems. In the 1990’s, Congress talked about phasing out the costly bank-based program and replacing it with the direct loan program. Such a step could save billions of dollars a year that could be directed into the federal Pell Grant program, which helps pay the college expenses of low-income students with outright grants. This common-sense plan was killed by the banking lobby, but it has returned in the form of a bipartisan House bill known as the Direct Loan Reward Act.

The bill would encourage the nation’s colleges to participate in the less expensive direct loan program by giving half of the savings to them in the form of Pell Grants for needy students. Backers of the loan reform bill say it could channel enough money into Pell Grants to increase the size of the awards by more than a third at some public colleges, raising the maximum grant to about $6,000 a year.

Supporters of the bill calculate that taxpayers may save more than $6 billion annually if all of the nation’s colleges and universities move to the direct loan program. But the money saved and the increase in Pell Grants would be substantial even if only a significant fraction of the nation’s colleges made the switch. That result alone makes this bill a good idea.

You can help by calling your Representative and demanding that s/he support the Direct Loan Reward Act for low income students. While you’re at it, the next time you go to your bank, take a few minutes to speak to a manager and tell them you don’t appreciate the bank’s lobbyists killing the first reform bill and that you’ll pull your account if they don’t support DLRA this time around. Remember: it’s your money, not theirs.

New CA Health Insurance Law Faces Showdown

Gray Davis signed a law before he left office as Gov of California–replaced by the Terminator in a controversial recall election–called SB-2. Among other things, SB-2 requires all businesses with 50 or more employees to offer them health insurance. California businesses promptly started a referendum to undo it.

By Marc Lifsher, LA Times Staff Writer

SACRAMENTO — The November ballot battle over California’s controversial new law on employer-provided health insurance is shaping up to be both noisy and expensive.

The law, known as SB 2 and signed in the waning days of Gov. Gray Davis’ abbreviated term, is facing a recall of its own. A business-backed referendum on the Nov. 2 ballot could wipe the law off the books.

The contest officially kicks off today when a coalition that includes labor unions, doctors, nurses, church groups and retirees launches its defense of the 2003 law. Among other provisions, SB 2 will eventually require businesses with 50 or more employees to provide health insurance for their workers.

The pro-SB 2 campaign plans to play on the insecurity of California voters who worry about paying an ever larger share of their employer-provided health insurance or losing their coverage altogether.

For example, proponents of the law plan to focus on its less publicized provisions, which ban employers from dropping current health insurance plans and limit workers’ share of health insurance premiums to 20%.

At the same time, the “Yes on SB 2” campaign will soft-pedal the law’s mandatory-insurance provision, which has been a lightning rod for opponents.

And that’s exactly where business groups, which won’t officially launch their anti-SB 2 campaign until summer, see a soft spot. Employers argue that the law is a job killer that will raise their costs, lead to higher taxes and insert government meddling and bureaucracy into the healthcare market.

(To read the rest, click the title)