Echoing the action of the House of Representatives on Tuesday, the Senate on Wednesday unanimously approved a bill to extend the Higher Education Act for five years.
The legislation now awaits expected presidential approval.
With a vote of 96-0, the Senate passed the authorization of a decrease in student loan interest rates and an increase in the maximum level of Pell Grants.
The interest rate reduction, from 8.2 percent to 7.4 percent, will mean students taking out federal loans could save hundreds of dollars over the duration of their loan repayment, said Phil Lewenstein, director of communications and legislative services for the Minnesota Higher Education Services Office.
This reduction will be the greatest benefit most students will reap from the reauthorization, said Tom Etten, the University’s director of federal relations.
“The fact that students will be able to consolidate (the loans) at one lower rate, that in and of itself is a major victory for students,” Etten said.
Because the legislation calls for a new formula enabling the rates to be lowered, any interest rate increases will be protected by the new formula. This change would stave off any major rate increases, Lewenstein said.
In addition to protecting income, the new legislation will also place independent students in a position to obtain more assistance, Lewenstein said.
“They did a lot of adjusting and tinkering with what was there already,” Lewenstein said.
While the consensus is positive about the interest rate reduction, others question Congress’ ability to follow through on the Pell Grant increase.
The bill authorizes increasing the maximum Pell Grant from $3,000 to $4,500 for the 1999-2000 academic year. A $300 increase would be implemented annually for the next three years, followed by a $400 increase in 2003-04.
Historically, Congress has authorized similar projects, but not had the funds to support them, Lewenstein said.
“The real test will be if Congress actually funds those items,” Lewenstein said of the Pell Grant increase.
Josh Syrjamaki, policy liaison on higher education for Sen. Paul Wellstone, D-Minn., said the interest rate reduction is guaranteed, but agreed that Congress’ authorization does not guarantee the availability of additional Pell Grant funds.
“It’s going to be tough given the budget constraints,” Syrjamaki said. “The challenge will be getting Congress to pay for the increase.”