Four members of Congress joined students from their home states in the
Capitol today to announce the reintroduction of the Student Aid Reward (STAR) Act. According to a 2006 CBO analysis, the STAR
Act could increase student grant aid by $10 billion dollars over the next
decade by cutting subsidies to private banks.
“The STAR Act will provide billions of dollars in additional aid to
students at no additional cost to taxpayers,” explained Massachusetts Public
Interest Research Group (MASSPIRG) student board member Michelina Ciruolo, a
student at Salem State College in Massachusetts. “This is responsible education policy that
benefits both students and the American public.”
The federal government operates
two major loan programs to help students pay for college: the Federal Family
Education Loan (FFEL) and the Direct Loan (DL) programs. Under current law, individual colleges choose
which program they will use to make loans to their students.
“This new Congress has taken action to make college more affordable by
lowering interest rates on loans and introducing proposals to increase the Pell
Grant in the House and Senate,” said Gabriel Elsner, a student at the
University of California-Berkeley and a CALPIRG volunteer. “We’re excited by
the priority that Congress has placed on this issue and believe the STAR Act
provides an opportunity to pass comprehensive legislation to make college more
affordable.”
While the FFEL and DL programs
deliver the same loans, interest rates and identical terms to students, the DL
program is less costly to taxpayers because it eliminates the need for an
intermediary, cuts out unnecessary subsidies for private lenders and raises
loan capital at lower rates.
“The Student Aid Reward Act
would allow colleges and universities choosing the less expensive Direct Loan
program to receive half of the savings that they generate and use this new
money to provide additional financial aid to students already receiving Pell
Grants,” explained Matt Guidry, Vice-Chair of the WISPIRG student board and a
student at the University of Wisconsin-Stevens Point.
“Nearly 200 PIRG activists from
across the country will be lobbying on Capitol Hill this week, and one of our
top priorities is to build bipartisan support for the STAR Act,”added Oregon
Student PIRG Board Chair Katherine Coffel, a student at the University of
Oregon.
