Bush to increase student aid Posted on May 10th
WASHINGTON - Congress sent President Bush legislation yesterday to boost financial aid for college students by about $20 billion.
The measure would shift that money to direct student loans and cut that amount in government subsidies to banks that make student loans.
Bush has said he would sign the legislation, despite objections to parts of the bill. Specifically, the administration has criticized a student-loan interest-rate cut and a new loan-forgiveness program, among other things.
The House voted, 292-97, for the student aid bill yesterday. Earlier in the day, the Senate approved the measure, 79-12. All the lawmakers who voted against the bill were Republicans.
The bill would increase the maximum Pell grant, which goes to the poorest college students, from $4,310 a year to $5,400 a year by 2012.
It also would cut interest rates on federally backed student loans to poor and middle-class students to 3.4 percent from 6.8 percent over the next four years.
California Rep. Buck McKeon, the leading Republican on the House education committee, said students would go back to paying the higher rate in four years or taxpayers would have to foot the bill for the cut to continue.
Democratic lawmakers say the roughly $20 billion in cuts to banks are aimed at excessive government subsidies to lenders. The subsidies were established to ensure that banks enter and stay in the college loan business.
Banking industry officials have objected to the cuts and have said they could adversely affect services to borrowers.
Nearly all of the cuts would go toward making college cheaper, but $750 million would be spent on federal budget deficit reduction.
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