Yesterday, President Obama visited Northern Virginia Community College to sign the Student Aid and Fiscal Responsibility Act, shorthanded by lawmakers as “SAFRA.”
One reason the President signed the bill at a community college is to underscore that the new law includes $2 billion to improve educational and career training programs at community colleges. These 2-year schools can be a smart alternative for students and their families who are looking to save money, but attain an associate’s degree, or stay on path to a bachelor’s.
Nevertheless, four-year schools get ever more costly and the bill does nothing to directly address the high cost of college, through previously discussed methods such as price controls or penalties to schools for raising their prices above certain levels.
For instance, the bill authorizes $36 billion for the Pell Grant program, increasing the maximum award for the next academic year to $5550 and, beginning in 2013, indexing increases in Pell Grant to the cost of living. Pell Grants are the “foundation” student aid program, meaning that students must first utilize a Pell Grant before any other need-based financial aid is awarded.
According to supporters of the bill, this new money became available for Pell Grants due to savings that were made by the elimination of Federal Family Education Loan (FFEL) program and the conversion of all federal student loans to the Federal Direct Student Loan (FDSL) program, administered by the U.S. Department of Education. Supporters of the bill noted that elimination of the FFEL program and originating all new loans in the FDSL program will yield a net savings of $61 billion over the next 10 years.
One other use of this savings will be to place an additional $1.5 billion into income-based repayment for student loans. Starting in 2014, new borrowers will be able to cap their student loan payments at just 10 percent of their adjusted gross income.
Despite the passage of “SAFRA,” the fact remains that college costs continue to go up, with many selective private schools already announcing tuition increases of more than 4%, and many state schools looking at double-digit percentage increases.
College Parents of America’s mission is to help parents understand, prepare for, protect and maximize their family’s college investment. With the cost of college continuing to rise, and this dramatic action by Congress barely making a dent in the price for the average family, we are proud to be working with GradGuard (www.gradguard.com), a service of Next Generation Insurance Group, in offering the first national group policy for tuition insurance.
The purchase of tuition insurance can go a long way toward bringing families some peace of mind when it comes to the college investment. As the cost of college continues to rise, college refund policies are getting stricter. A typical situation is that a school will not refund any tuition or fees after the beginning of the 5th week of a semester. With tuition insurance from GradGuard, a member of College Parents of America can file a claim for the loss incurred should a student have to withdraw from school for a medical reason.
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