When the House of Representatives passed healthcare reform Sunday, the reconciliation bill included a groundbreaking measure to increase grant aid to students. This part of the reform would increase the cost efficiency of government-issued student loans by directly issuing loans to students instead of subsidizing banks to make loans through the Federal Family Education Loan program.

The Senate is expected to look at the measure this week and Senate Majority Leader Harry Reid has said the bill has enough votes to pass.
 
The new system would save the government an estimated $61 billion over the next decade, and much of those savings would go directly back to students. Some $36 billion would be used to increase Pell Grants for lower-income students. Other uses would include $2.5 billion to historically black colleges, $2 billion to community colleges and at least $10 billion to reduce the federal deficit.
 
"This is incredibly good news for students and families and taxpayers," said Lauren Asher, president of the Project on Student Debt, a nonprofit advocacy group in Berkeley, Calif. "Taxpayer dollars that were being used to guarantee private lenders' profits are now being redirected to student aid and other important reforms to help keep college more affordable."
 
Some still think the final version is watered down. An earlier draft of the bill would have set the maximum Pell Grant at $6,900, instead of the maximum $5,975 it will reach by 2017. This year the limit is $5,550. If the bill had failed, however, the maximum Pell grant would have plummeted to around $2,150 and would have had to shed some half-million students from the program.
 
Additionally, in this version of the bill the grant will increase in value at a rate linked to inflation in only five of the next 10 years, according to Mark Kantrowitz, publisher of the college-aid website Finaid.org.
 
“It’s falling far short of tuition inflation,” Kantrowitz said, “It could have been a lot better.”
 
The financial industry has lobbied heavily against the bill, saying that taking business from the private lenders would cost the country jobs at a bad time. But proponents of the bill counter that there would be few, if any, lost jobs, because private lenders would still work with federally issued loans.
 
UC Irvine economics major Sarah Bana went to Washington, D.C. this week to lobby for the bill. Currently a senior, Bana said she got a $3,400 Pell grant this year, along with $12,400 in other financial aid.
 
“It was beautiful to see legislators finally speaking up for students and students’ rights,” Bana said. “[Pell grants] are definitely a big factor for me being able to come to college.”

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