Last Thursday, the Democratic-led U.S. House of Representatives approved H.R. 3221, the Student Aid and Fiscal Responsibility Act of 2009. This legislation would implement some of the Obama administration’s goals for higher education, including substantial changes to student financial aid.

SAFRA would, among other things, factor in the inflation rate so the maximum Pell Grant students receive would increase as the inflation rate increases plus one percent. Perhaps most controversially, the bill would end a program that subsidizes private lenders that provide federally guaranteed student loans and replace it with direct government lending.

Cornell’s director of federal relations Jacqueline Powers addressed the specifics of the legislation and said that “there is some good and some bad.”

“We’re happy that the goal of this bill is to increase access to higher education and completion,” Powers said.

Powers explained that the elimination of federal subsidies to banks and other private lenders will save the government an estimated $87 billion. The legislation would put $40 billion of those savings into the Pell Grant program to increase the maximum awarded in the FY10 budget.

“Over the next 10 years,” she said, “it would provide for an increase that is linked each year to the Consumer Price Index: a guaranteed increase in the maximum award.”

“We’re happy that the bill will provide more funding for Pell Grants,” Powers added.

Pell Grants are awarded to undergraduates with the most need, and almost 2,000 Cornell students received Pell Grants as of March 2008 for the 2007-08 academic year, according to Powers, citing the most recent data available.

The possible benefits of the new legislation, however, may not necessarily trickle down to Pell Grants’ recipients at Cornell.

“Given our financial aid policies, an increase in Pell Grant aid that our students receive reduces their Cornell grant aid dollar for dollar. So this will benefit primarily our financial aid budgets, not our students, although the University can use the savings to do other things,” said Prof. Ronald Ehrenberg, industrial labor relations, who also directs the Cornell Higher Education Research Institute.

Moreover, as Cornell is already a direct lending school, “students would not see any change in the processing or servicing of those loans,” according to Thomas Keane ’82, director of Financial Aid for Scholarships and Policy Analysis.

“I don’t see much in this legislation that will make the aid application process much simpler,” Keane said.

Addressing the potentially problematic aspects of the bill, Powers said that “details that are not spelled out in the legislation are worrisome.”

For example, Powers said there is a new fee for institutions to participate in the Perkins Loan program which would make it “unfeasible” for a number of institutions to participate.

“Cornell will have to look at the details,” she said. “I cannot imagine that we would not [participate], but it would be an increased expense at a time when higher education is facing tight fiscal restraints.”

Privacy is also an issue in the legislation, which requires data tracking of students from the time they enter kindergarten through completion of higher education.

“Databases are not fool-proof,” Powers said.

Additionally, she explained, there is concern that there could be “too much state control over higher education and academic matters.”

While Cornell students were unclear about the specifics of the legislation, they seemed to favor the legislation in general.

“Financial aid is important,” Brice Cooke ’11 said. “I couldn’t go here [to Cornell] without it. … Ideologically speaking, I don’t want the banks involved because I think the government will do a good job. If money from taxes goes directly back to the taxpayers, I don’t see why banks have to benefit.”

Ankur Bajaj ’13 also believes that “the government has our best interests at heart, rather than a profit motive.”

“A more streamlined process will be easier to understand,” he added.

Jessica Ye ’12 said simply, “Any way you can get more aid to more students is the way to go.”

However, Ehrenberg stated in an e-mail: “Remember that this bill has not been passed by the Senate yet, so we don’t know what the final bill will look like.”

H.R. 3221 has been referred to the Senate Committee on Health, Education, Labor, and Pensions.