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Student-loan change called ‘huge win for students’

BY ADAM B SULLIVAN | MARCH 31, 2010 7:30 AM

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President Obama signed legislation Tuesday that his administration said will help make education more accessible.

While the student-aid shakeup — part of the health-care reconciliation bill — likely won’t have much direct effect on students at the University of Iowa, officials from a local community college said the law is a “huge step” toward the Obama administration’s goal to drastically increase the number of Americans with post-high school education.

Some college students receive federally subsidized loans from private banks, but the new law will eliminate that lending and all students will borrow directly from the federal government, potentially saving $68 billion. Officials say the billions of dollars they save from cutting out private loans will be applied to programs which make higher education more affordable, particularly for students at community colleges.

The 10,000 UI undergrads who borrowed around $67.3 million from the federal government last year won’t be affected because those loans already come directly from the federal government, UI Director of Student Financial Aid Mark Warner said.

However, local officials say the move will be beneficial for students at community colleges.

“It’s a huge win for students,” said Chris Bowser, an enrollment services manager at Cedar Rapids-based Kirkwood Community College.

Bowser said the student aid legislation will make assistance more accessible, ultimately meaning more people will be able to pursue higher education. Forty percent of Kirkwood students receive Pell Grants — funds for low-income students which will be bolstered by the legislation. Around 19 percent of UI students receive Pell assistance.

“There will be more resources available to [students]. Some places, you can literally go to school for free,” U.S. Secretary of Education Arne Duncan told reporters after the legislation was signed.

Obama’s goal to have the world’s highest portion of college graduates by 2020 means relying on older Americans returning to school, officials said.

Only around 10 percent of UI undergrads are older than 23. At Kirkwood, that number is approximately 40 percent. And Steve Carpenter, public-information director at Kirkwood, said that population is growing.

A jump in nontraditional enrollees at community colleges doesn’t leave the UI unaffected.

University officials are working to strengthen their relationship with community colleges across the state.

Despite speculation that the Democrats’ student-aid legislation will increase accessibility, some have criticized the expansion of government power.

While UI political-science Associate Professor Tim Hagle said though the changes will make it easier to get loans, government control over loans could have negative consequences.

“Who’s to say what the federal government will do with interest rate? At some point, can they just jack that thing up?” said Hagle, a Republican. “With a bank, at least you have a contract so you know what that rate is going to be.”

Additionally, Hagle said there could be political backlash from advocates of small government.

“What this is doing is taking over another section of the country,” he said. “The federal government isn’t supposed to be in the business of making money.”


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