Chet Edwards For Congress - Student Financial Aid

Congress approves Pell Grant limit increase by 2012

econnor — Sat, 12 Jan 2008 12:11:31 -0700

Feb. 12, 2008
Congress approves Pell Grant limit increase by 2012

Baylor Lariat
By Sommer Ingram | Baylor Lariat reporter

As the costs of higher-level education continue to rise across the country, Congress continues its efforts to make education more affordable for students and their families. Last week, the U.S. House of Representatives passed the Higher Education Reauthorization Act, which reauthorizes the Higher Education Act through fiscal year 2012, increasing the maximum Pell Grant per year to $9,000.

The increase in the Pell Grant is $68 billion from 2009 to 2012. Congressman Chet Edwards, D-Texas, supports the bill.

"Keeping the doors of our colleges and universities open to bright, hard-working students is not only important for their future, it is critical for the future of our nation," said Edwards in a news release. "If America is going to compete in the global economy, we must knock down the financial barriers that are making it harder for qualified students to pursue a higher education. One of the ways we do that is by increasing Pell Grants."

Dr. Charles North, professor of economics, said that while Pell Grants are an effective way of getting kids from low socioeconomic backgrounds to college, they aren't the sole solution.

"If our goal is to reduce the amount of poverty in the United States, we need to focus more on pre-K through 12 children, because the roots of poverty are in elementary school," he said. "I'd like to see more money aimed at the earlier, more formative years in kids' lives so they can develop the skills and mindset needed for college."

In his State of the Union Address, President Bush proposed a multi-million dollar program called Pell Grants for Kids. Modeled after the Pell Grant program for college students, this program would provide grants on a competitive basis to schools to create scholarship programs for low-income students from kindergarten to twelfth grade to attend private schools. Unlike the increase in the Pell Grant, this new plan was proposed amid criticism of being a voucher in disguise.

"In my opinion, this is just a back door way of providing funding for kids to attend private schools--much like a voucher," said Dr. Kent Gilbreath, professor of economics. "It is highly unlikely that such a proposal will pass because Congress hasn't seemed to support vouchers. Simply calling this a 'Pell Grant' doesn't change anything."

Gilbreath said there are things that need to be addressed within the original Pell Grant program itself.

"The biggest problem with Pell Grants is that the amount of money has not kept up with the growing cost of higher-level education, kind of like minimum wage wasn't increased for years," he said.

Because Pell Grants are restricted to families below a certain income level, many middle-class families who can't afford college tuition out of their own pockets don't get help from the federal government.

"We must provide the very best education we can for everyone, because the future of our competitiveness as a nation is based on brains, not brawn," Gilbreath said.

Gilbreath said the increase in Pell Grants has no effect on the economy and talk of recession.

"That matter is rather irrelevant," he said. "But one of the big clouds looming on the horizon is the huge amount of debt students leave college with -- it can have a stifling effect on the economy and business cycle. But Pell Grants are a step up both economically and socially for thousands of low-income families, so an increase is a huge step in the right direction."

Editorial: Where's shared sacrifice?

Kat — Mon, 27 Feb 2006 10:34:02 -0700

February 27, 2006
Editorial: Where's shared sacrifice?

Waco Tribune Herald
By Editorial Staff | Waco Tribune Herald

We doubt a single college student exists who, when appraised of the deep budgetary hole this nation has dug for itself, wouldn't say, “I'll do my share to help get us out.”

Well, college students are doing more than their share.

Meanwhile, a lot of Americans are coasting.

Congressman Chet Edwards has brought rightful attention to what's being called the “student tax” - $11.9 billion in cuts from federal student assistance recently signed by President Bush.

Particularly in the form of higher interest rates for subsidized student loans, it could cost an individual student hundreds of additional dollars.

Meanwhile, as Edwards points out, if Congress stays the course in extending Bush's tax cuts, someone making $1 million a year in dividends would be getting a $220,000 annual tax break.

Don't look now, but Bush's new budget looks to cut further into college aid, a move that will especially hurt the middle class.

While the poorest Americans will continue to qualify for Pell grants, as well they should, and the wealthiest continue to accumulate tax-deferred college savings accounts, those in the middle with no other student aid will rely on work-study and college loans.

In the debilitating hit on college aid, students are seeing where reality clashes with rhetoric in the political world, particularly when tax cuts are put ahead of government's obligations.

It is common to talk about cutting budgets “across the board,” but that's not what happens. We have soldiers fighting overseas. Even in peacetime the military budget generally will be hands-off. It makes up roughly one-half of what's called discretionary spending. The big tickets of non-discretionary spending are entitlements like Social Security and Medicare, and interest on the national debt (which accounts for about 16 cents of ever dollar the government spends.) That leaves such things as education and veterans services vulnerable to plundering - that is, if exorbitant tax cuts are considered sacrosanct.

College students would offer to help dig this nation out its hole, but what has been done to them is punitive. Congress should step back and ask, “Is the sacrifice being shared?”

Edwards urges reversal of cuts to financial aid

Kat — Fri, 24 Feb 2006 12:35:22 -0700

February 24, 2006
Edwards urges reversal of cuts to financial aid

AP via Bryan-College Station Eagle
By ANGELA K. BROWN | Associated Press

WACO - Pepper Jones, a single mother of four children, says she couldn't go to college without about $14,000 in student loans and other grants.

But with Congress' recent passage of a bill that cuts nearly $12 billion in financial aid programs, Jones worries whether she'll be able to afford her education. She says she might give up her dream of teaching disabled children to pursue a career that pays more money.

"Teachers don't make any money, so if my student loans' interest rates go up, I won't be able to afford to pay them back," said Jones, 26, who attends McLennan Community College in Waco. "I guess I could do something else that I wouldn't like at all."

Earlier this month, Congress approved a bill cutting $11.9 billion by reducing lender subsidies and retaining a scheduled shift from variable interest rates to a 6.8 percent fixed rate on most loans.

The bill was part of a $39 billion, five-year deficit reduction bill that the U.S. House passed by a 216-214 vote; the Senate's vote was 51-50, with Vice President Dick Cheney's as the tie-breaker.

U.S. Rep. Chet Edwards, D-Waco, who voted against the bill, said it is the nation's largest reduction in federal student aid and essentially would put a $6,500 tax on student loans. Some 10 million college students now receive financial assistance, he said.

"The federal government is the largest single source of student financial aid in this country, so when Washington starts cutting back on the student financial aid, it can have a dramatic impact on millions of students all across the country," Edwards said Thursday at a news conference at McLennan Community College.

The college's president, Dennis Michaelis, and Elton Stuckly, president of Texas State Technical College in Waco, said they were concerned about the impact of the cuts. At least 60 percent of their students receive financial aid.

Lumina Victor, 20, a business administration major at McLennan Community College, is the youngest of 10 children. She and one of her sisters are the only ones in their family to attend college - and solely because of student loans. She said they now fear not being able to pay back the increased interest rates.

"It'll probably hit me hard when I get out," Victor said.

Edwards said he was urging lawmakers to vote again on the matter.

Local college students fear high interest ...

Kat — Fri, 24 Feb 2006 10:31:09 -0700

February 24, 2006
Local college students fear high interest rates, loss of student loans

Waco Tribune Herald
By David Doerr | Tribune-Herald staff writer

McLennan Community College student Pepper Jones is what some consider a prime example of students struggling to put themselves through college. She's also the sort of student who may suffer because of Congress' massive cuts in financial aid.

The mother of four, Jones, 26, says she's at the crossroads of her education, trying to decide if it's worth it to fulfill her dream of becoming a first-grade teacher. She doesn't want to change her major to pursue another career so she can graduate sooner, but she might consider it if she's unable to get federal financial aid to pay for college.

U.S. Rep. Chet Edwards, D-Waco, used Jones as an example of students who might be hurt after Congress, by the narrowest of margins, cut $11.9 billion from federal college student financial aid over the next five years. It's the “largest reduction in federal student aid in our nation's history,” he said.

Edwards held a press conference Thursday with MCC President Dennis Michaelis and Elton Stuckly, Texas State Technical College president, to speak out against the cuts, signed into law by President Bush this month.

Ironically, the job Jones might have to settle for - that of a medical transcriptionist - pays more than teaching.

“You have to choose between money and what you truly want to do - and money will probably win hands down,” said Jones, who is in her second year at MCC and has $14,000 in loans to repay. “I'm just wondering how I'm going to pay them back if interest rates keep going up.”

The legislation, part of the Deficit Reduction Act of 2005, will cause students and parents to pay higher interest rates on federal student loans and reduce financial aid for low-income students by changing eligibility formulas for Pell Grants, Edwards said.

While the average cost of tuition and fees at four-year colleges has risen by 40 percent in the past five years, some students, already facing high gasoline and utility bills, are being forced to defer dreams of a college education, Edwards said.

For those who do continue college, rising interest rates on student loans are making them think twice about how much debt they're willing to accumulate by the time they graduate, he said.

If the cuts were going to reduce the national debt, Edwards said, he could understand the reasoning for such reductions. Instead, the cuts are paying for a tax cut for dividend income earners for people making more than $1 million a year on investments, he said.
“I don't think members of Congress or the president's cabinet ought to be getting tax cuts paid for by making college less affordable,” he said.

U.S. Rep. John Carter, R-Round Rock, disagreed with Edwards' assessment of the budget cuts in a statement issued after the press conference. “The Deficit Reduction Act expands access to college and improves student benefits by encouraging a more efficient and effective government,” Carter said. “This bill takes important steps to reduce the federal deficit while continuing to support the needs of all Americans.”

On Thursday, Edwards, a member of the House Appropriations Committee, vowed to push for reversal of the cuts and urge others in Congress to reject the Bush administration's 2007 budget proposals eliminating certain vocational education programs, ending funding for federal Perkins loans and freezing funding increases to the federal Pell Grant program.
Perkins loans are for students with exceptional needs, providing borrowers with a fixed 5 percent interest rate. Low-income students are also eligible for Pell grants, which do not have to be repaid.

Budget writers say the cuts are necessary to eliminate ineffective and duplicative programs. However, several college students who participated in Thursday's press conference said the cuts would only worsen their already difficult financial situations.

“Anything that takes away money from our budget causes us to take money from somewhere else,” said Robert Kent, a 38-year-old MCC engineering student who works at Subway to help pay for college as well as six children. He says he relies on financial aid to keep the gas tank filled and the electricity on.

MCC President Michaelis said he was particularly worried about losing funding for vocational and technical programs that have helped the college purchase equipment such as mannequin simulators that are used to train lab technicians and other health professionals. Last year, the college received $712,635 from the program.

“In terms of billions of dollars in (the federal) budget, that money doesn't mean much,” he said, “but I'll tell you what - to this college, it means everything.”
Stuckly said TSTC relies heavily on the vocational program funding, which amounted to about $1.5 million last year.

“Anytime you start talking about $1.5 million,” he said, “the anxiety level goes way up because we need it.”

Raising The Cost Of Student Loans Unwise

Kat — Sun, 06 Nov 2005 22:06:08 -0700

November 6, 2005
Edwards: Raising The Cost Of Student Loans Unwise
Special to the Eagle

Bryan-College Station Eagle
By REP. CHET EDWARDS | Op-Ed

I am deeply disappointed that the U.S. House leadership pushed through the Budget Committee on Thursday partisan legislation that could add $5,000 to $28,000 to the cost of college student loans. This legislation, contained in the 2006 Budget Reconciliation bill, could be on the House floor for a vote as early as this week.

Unless we can stop the higher interest rates and new origination fees in this bill, they, in effect, will amount to an expensive new student tax. This student tax would place a tremendous burden on thousands of college and university students in our district who have taken out loans to pay for their college educations.

With costs for gasoline, utility bills and higher education already rising rapidly, the new student tax could force some students to take on a second or third job, and for others it might mean dropping out of college. For high-achieving middle- and low-income high school students, it might mean many of them have to give up their dream of a college education.

By significantly increasing the interest payments on college loans, this bill might force future teachers into taking higher-paying jobs instead of pursuing their calling to teach.

As our nation faces both increasing foreign competition and the largest trade deficits in history, there could not be a worse time for Congress to increase the cost of college loans. Doing so would be unfair to students and a prescription for long-term economic stagnation.

Budget estimates are that this bill would reduce federal funding for college student loans by $14 billion over the next five years; $7.8 billion of that would be direct cost increases to students, and $6 billion would be from cutting subsidies and increasing fees to lenders. It is, in reality, a $7.8 billion tax on students and families with outstanding student loans. If half of the cost increase to lenders are also passed on to students, it would be a $10.8 billion tax on students.

How does this bill raise costs to students and families? First, it would mandate a new 1 percent origination fee on consolidated student loans. Second, there would be a new 1 percent increase in the interest rate for borrowers who want to consolidate their student loans at a fixed rate. Third, borrowers who are still in school would no longer be able to lock into their present low loan rates. Finally, the bill raises fees on new student loans as well as raising the cap on the interest rates that students and parents pay. With subsidies to banks and other lenders also cut by $6 billion, the bill will most likely reduce the private capital available to students for college loans.

According to Dr. Charles Young, president emeritus of UCLA, the present 5.3 percent rate for consolidating federally insured student loans would increase to 7.18 percent. That is a 35 percent increase in the loan rate.

When stretched out over 20 years on a $20,000 loan, the new student tax would total an extra $5,255. For a $40,000 loan over 25 years, the student tax would add $13,932 to total loan repayments.

These increases assume that interest rates on 91-day T-bills do not go up. If, for example, those T-bill rates went up 0.75 percent between now and May 31, 2006, a student borrower could be forced to pay $19,709 more on a 25-year, $40,000 student loan.

College students and their families have a right to be outraged that the new student tax could be passed into law by Congress with very little input from those who will be hit the hardest.

The House leadership is no doubt hoping this bill will pass before college students and their families even know about it.

To add insult to injury, the Republican House leadership has chosen to cut $14 billion from student financial aid programs over the next five years in order to pay for an extension of its dividend cuts that gives a $220,000 annual tax break to those making $1 million a year in dividend income.

I believe the House leadership is out of touch with the values and priorities of American families, Democrats, Republicans and independents alike. If Congress would ask those making a million dollars a year in dividend income to give up just a part of their $220,000 annual tax cut, it wouldn't be necessary to pass a $14 billion student tax that will hurt high achieving students and harm our nation's future competitiveness.

The $14 billion student tax is a bad idea and should be defeated. I hope the voices of college students and their families will be heard in Congress before it is too late.