Congressman Rick Larsen's Online Office

Washington, D.C. —  U.S. Rep. Rick Larsen (WA-02) voted today to make the single largest investment in aid to help students and families pay for college in history – at no cost to taxpayers. The Student Aid & Fiscal Responsibility Act (SAFRA) (HR 3221) would shift all new federal student lending to the Direct Loan program starting July 1st 2010, generating funds that will be reinvested in Pell Grants, community colleges and other education initiatives.  The bill passed the House of Representatives by a vote of 253 to 171.

“Today our country took a giant step forward for American students and families,” said Larsen. “During these tough times, this important step will help to rebuild our economy and make sure our young people have the ability to attend college or get career training.  Washington students and families have been staggering under the enormous weight of tuition costs and loan repayments.  With the passage of SAFRA, we have made a historic investment in higher education a reality.”

“The passage of the Student Aid and Fiscal Responsibility Act will mean increased Pell Grants for our neediest students at a time when more families need help in paying for college.  The adoption of the Direct Loan program for all schools will ensure a stable source of funding for student loans and a simple, cost effective way for students nationwide to receive their loans.  HR 3221 is a positive step forward in ensuring access to higher education,” said Kay Lewis, Director of Student Financial Aid at the University of Washington.

The bill will change the way the student loan system functions by originating new loans through the government’s Direct Loan program, but will maintain competition among private lenders and non-profits to maintain quality customer service for student borrowers. This change will make college loans more reliable for students and families -- and ensure that loans operate in the best interests of borrowers by reducing many of the potential conflicts of interest that exist in the current loan system.  

“Washington colleges and universities that have switched to the Direct Loan program have found it to be very positive. It simplifies the process for students and eliminates the possibility of predatory lending.  By expanding the Direct Loan program, the estimated savings of over $80 billion will significantly increase PELL grants for students.  This will be a tremendous help for students to have the aid they need to attend and remain in college to achieve their goals,” said Patricia Onion, Vice President for Educational Services at Whatcom Community College.

SAFRA will reform the system of federal student loans to save the taxpayers $87 billion and will direct $10 billion back to the Treasury to reduce entitlement spending.
This bill also includes an increase in government grant and loan assistance for college tuition payments. Pell Grants would increase to $6,900 by 2019 from $5,350 today. SAFRA would also keep interest rates low on government-subsidized loans, make investments in community colleges, expand the Perkins low-cost loan program to every U.S. college, and simplify the process of applying for student financial aid.

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