Interim President C. Peter Magrath, left, and U.S. Rep. Maurice Hinchey speak before a news conference in the Admissions office Aug. 30 on how financial-aid improvements are helping students and families.
Photo by Jonathan Cohen
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Binghamton University students are among those benefiting from a new law that has overhauled the federal student loan program.
U.S. Rep. Maurice Hinchey visited the University on Aug. 30 to tout the Student Aid and Fiscal Responsibility Act (SAFRA). The law, which Hinchey helped pass in March, saves taxpayers $61 billion and improves education access.
“That $61 billion is now being used to make the most significant college aid investment in American history,” Hinchey said at a news conference in the University’s Admissions office. “This is making college more affordable so the next generation can be prepared for the jobs, challenges and needs of the 21st century.”
SAFRA now originates all new student loans through the government’s Direct Loan program instead of a third-party bank, something the University was already doing. Students will now see an increase in Pell Grant funding, as $36 billion will be invested over 10 years, Hinchey said. Before SAFRA, the maximum Pell was to be cut from $5,540 in 2010 to $2,840 in 2011. The grant will now increase to $5,975 by 2017.
“This assistance is paid for in part by cutting out wasteful fees that have been paid by the federal government to big banks,” Hinchey said. “The largest private banks in the country got huge amounts of this money and used it in whatever way they thought was best for them.
“Supporting students and their families is a win-win for our country and a better use of taxpayer dollars.”
SAFRA also makes loans more affordable for borrowers by investing $1.5 billion in the Income-Based Repayment program. The program allows borrowers to cap monthly federal student loan payments at 15 percent of their discretionary income. The cap will be lowered to 10 percent for new borrowers after 2014.
Jenna Pollak, a junior neuroscience major who has been helped by Pell Grants, cited the importance of SAFRA.
“I will enter medical school with a lighter mind on my financial situation because of Pell,” she said.
Interim President C. Peter Magrath also praised the law, saying it changes what was “a dysfunctional, broken system that took a lot of financial aid away from needy students.
“Thanks to a lot of good people, including the congressman, we now have a system that puts money where it belongs – into Pell Grants.”