Student loan reform could make college education more accessible

SALT LAKE CITY – Coming from a family of four kids, Richard Savage didn't expect much help paying for college. He had just exhausted his savings on his LDS mission to England prior to starting school at the University of Utah and the financial pressures meant he'd still have to work at least 30 hours while taking a full load of courses.

"And I was working as a skilled laborer, working on machines, making fairly good money," he said Wednesday during a press conference hosted by college democrat clubs from across the state, held at the U.'s Hinckley Institute of Politics. "But it was a struggle to keep up."

Savage's government-issued Pell grant, which he doesn't have to pay back, makes it possible for him to work on completing a degree.

Over the years, due to inflation and rising tuition costs across the country, the value of a Pell grant has fallen to cover about 30 percent of what used to be half of a student's expenses. Savage said new legislation will allow more people to go to school. The new measure not only increases the amount of the grants over the next 10 years but also allows them to keep pace with cost of living increases after that, Savage said.

"Education will not be limited to class or means but will be accessible to all," he said.

The Student Aid and Financial Responsibility Act, passed into law late last month, eliminates the middlemen – banks that have been originating loans – while also collecting fees and interest on the loans divvied out. It is projected that the new program will save the $68 billion it will cost to implement over the next 10 years, resulting in a reduction in the national deficit.

While Pennsylvania State University has already begun originating student loans at no extra cost, Utah Higher Education Assistance Authority Executive Director Dave Feitz said it will undoubtedly require additional administrative costs for Utah schools.

"There will definitely be system and staffing and reconciliation costs that will have to now be absorbed by the schools," he said. "There is absolutely a cost."

UHEAA is pursuing a servicing contract with the U.S. Department of Education, a provision written into the legislation, that will allow them to continue servicing loans, providing local convenience to students.