Why SAFRA will benefit students
Amidst the impending doom of federal stimulus money evaporating next semester and the inevitable annual fee hike along college campuses, students last week got at least a glimmer of hope when the Student Aid and Fiscal Responsibility Act (SAFRA) passed the House of Representatives.
The bill, which passed by a 253-171 voting margin, is designed to restructure financial aid for college students, increase federal grant money, cut out private lenders from the student loan process, and, according to the bill’s backers, save $87 billion for taxpayers in a 10-year period.
It’s great news and a distinct improvement for college students everywhere – except for that last part.
The estimate, which stems from the Congressional Budget Office’s analysis, has been the target of a great deal of criticism since the vote. And rightly so.
Although the bill’s aim is to cut costs and save money by simplifying and streamlining the currently clunky financial aid system by allowing students to take out loans directly from the government through their university, the impact on taxpayers is not expected to be so beneficial. In fact, opponents of the bill have come forth claiming that, rather than saving money, the damage of the retooling and increase in financial aid will be around $50 billion dollars out of taxpayers’ wallets.
While the price tag of the proposal is under siege, the bill’s restructuring of the financial aid system will be beneficial to students.
First, the bill will simplify the Free Application for Federal Student Aid (FAFSA). Rather than go through an entirely different process, the FAFSA forms will take the same information that goes on tax returns.
Second, students will handle their loans through their respective universities and colleges to receive money from the government. This change will eliminate the middle man from the loan equation, but will not push lenders out of business. While not handling the loans, private companies will still collect and service the loans.
Despite this, it’s far too early for students to hail SAFRA as the end of college debt. The changes placed in the bill will be beneficial to college students and improve the system, but the fiscal claims that are coming out from its supporters are far too outlandish to be taken seriously.
When one side predicts almost $90 billion in savings while the other projects almost $50 billion in cost, someone’s wrong. And with the way the financial aid system has been implemented in the past, the inevitable conclusion is that the outcome will be closer to the latter. While the bill’s feared cost didn’t get any flack in the house, the Senate opposition is expected to put up a bigger fight.
It’s impossible to argue the benefits of the SAFRA bill. It’s the best thing that’s come out for college students for a while. But with estimates so radically different, the underestimation of spending costs in recent legislature and the overall status of the nation’s economy, it’s too early to put away the picket signs.
Unsigned editorials represent the majority opinion of The Massachusetts Daily Collegian editorial board.