Financial Aid Measures Bound to Disappoint

It would be nice to have some good funding news for a change, but Washington is displaying a  too-little-to-late syndrome that, if it continues, is going to stall higher ed recovery.

The Chronicle of Higher Education's Paul Basken has a particularly through review of the state of the student-loan bill in Congress. The bill does continue to cut out the unaffordable private-sector banking middleman, for savings of over $6 billion a year even by the lower count offered by the Congressional Budget Office: "The legislation would end the bank-based system of distributing federally subsidized student loans, and instead would have the Education Department give all loan money directly to colleges and their students."  Pell Grants would be indexed to inflation instead of eroded by it, as is current practice.

But early-education program funding is gone from the bill, community-college assistance - the backbone of the Obama Administration's attainment recovery strategy-- is 20% of the original figure, interest-rate subsidies were cut so the rate starting 2012-13 is slated to be 6.8%, better than a credit card but not much better than the private lenders that students have been increasingly unable to afford.  And the Pell Grant inflation adjustments are not scheduled to start until 2013. 

As with other Democrat proposals, the student loan bill is better than what we have but nothing like the ambitious, step-function investment that built public higher ed and that is needed to rebuilt it now.