2008 Woodie Awards
Bush gets out of loan business, focuses on grants
EDITORIALS
Issue date: 3/3/05 Section: Opinion/Editorial
- Page 1 of 1
In the crazy world of college tuition, anything can happen. Schools can decide to eliminate tuition, like St. Louis Christian College did last month. Schools can get a little carried away, such as the University of Missouri at St. Louis, which had an outlandish 23.8 percent increase after the 2002-03 school year. Sometimes though, it's the government, not the schools, that throw students a twist.
President George W. Bush is playing around with confusing world of college funding. As many students know, the government currently sponsors two major types of funding in the form of loans and grants. Pell Grants, which help 5 million students a year, have a maximum grant amount of $4,050. Bush hopes to increase these awards by $500 over the next five years.
On the other hand, Perkins loans are apparently on their way out. About 673,000 students a year currently receive these low-interest loans. The interest rate is locked at 5 percent, while other loans, such as Stafford loans, vary. Currently the interest rate for Stafford loans are hanging out around 3 percent.
It's peculiar that Bush, recognized in some circles for his capitalist tendencies, prefers hand-outs to loans. He could have good reason. Pell grants reach more students, while Perkins loans only reach a quarter of universities. Webster receives Perkins loans, but it only gets $25,000 a year from the government. That amount only covers about 6 percent of the loans it gives out, according to Jon Gruett, director of financial aid.
The number of students applying for Pell grants continues to grow as tuition climbs and the number of low-income students attending college increases. It's reasonable for Bush to tighten eligibility for the grants only to the neediest. This will allow those who need the grants to get a bigger chunk of money.
Although private loans are subject to market forces and unpredictable interest rates, they still make more sense than government loans. Since loan programs pretty much pay for themselves, there's no reason why government should be in the business. Webster's loan program, like most loan programs, is self-perpetuating.
Students use loans to go to school, and then when they get a great-paying job with all that college education, they can pay the loan back and the cycle can start again. Idealistically, that is.
Private loans are available to all students, not a mere fourth of universities. If the government can better fund Pell grants by eliminating its loan program, then it should.
President George W. Bush is playing around with confusing world of college funding. As many students know, the government currently sponsors two major types of funding in the form of loans and grants. Pell Grants, which help 5 million students a year, have a maximum grant amount of $4,050. Bush hopes to increase these awards by $500 over the next five years.
On the other hand, Perkins loans are apparently on their way out. About 673,000 students a year currently receive these low-interest loans. The interest rate is locked at 5 percent, while other loans, such as Stafford loans, vary. Currently the interest rate for Stafford loans are hanging out around 3 percent.
It's peculiar that Bush, recognized in some circles for his capitalist tendencies, prefers hand-outs to loans. He could have good reason. Pell grants reach more students, while Perkins loans only reach a quarter of universities. Webster receives Perkins loans, but it only gets $25,000 a year from the government. That amount only covers about 6 percent of the loans it gives out, according to Jon Gruett, director of financial aid.
The number of students applying for Pell grants continues to grow as tuition climbs and the number of low-income students attending college increases. It's reasonable for Bush to tighten eligibility for the grants only to the neediest. This will allow those who need the grants to get a bigger chunk of money.
Although private loans are subject to market forces and unpredictable interest rates, they still make more sense than government loans. Since loan programs pretty much pay for themselves, there's no reason why government should be in the business. Webster's loan program, like most loan programs, is self-perpetuating.
Students use loans to go to school, and then when they get a great-paying job with all that college education, they can pay the loan back and the cycle can start again. Idealistically, that is.
Private loans are available to all students, not a mere fourth of universities. If the government can better fund Pell grants by eliminating its loan program, then it should.