Sen. Edward Kennedy, D-Mass., proposed raising the maximum award in the U.S. government's main college scholarship program by 56 percent within five years and barring financial inducements to schools by student-loan companies.
The largest college grant for students from low- and middle- income families would rise to $6,300 for 2011-12 from $4,050 this year under legislation filed today by Kennedy.
Kennedy would also bar lenders such as SLM (Sallie Mae) and Citigroup from making payments to colleges or their employees in exchange for student-loan business, a practice that has been the subject of state and federal inquiries.
The Senate Health, Education, Labor and Pensions Committee, which Kennedy chairs, is one of three in Congress investigating the $85 billion-a-year student-loan industry.
Along with New York Attorney General Andrew Cuomo, they have found that some lenders had undisclosed arrangements to provide colleges or their staffs with payments, consulting fees, company shares and other perks.
Kennedy's plan would increase the scholarships, known as Pell grants, more than a measure approved last week by a House panel and more than President Bush recommended.
Kennedy's measure would require the U.S. Department of Education to develop a tuition-cost index and publish a "Higher Education Price Increase Watch List" each year of colleges and universities that outpace the index in their increases.
He also would bar lenders from sharing revenue with schools based on loan volume or offering payments, consulting fees, travel or other perks to win financial-aid business.
A report Kennedy's committee staff released last week showed that lenders provided trips to resorts, tequila, wine and sports tickets to college financial-aid officials.
Lenders would be required to disclose to the Department of Education any "reasonable expenses" paid to a college employee for instances such as service on advisory boards or professional-development events.
Student-loan providers also would have to adhere to a code of conduct prohibiting conflicts of interest.
Colleges and universities have typically maintained lists of "preferred," or recommended, lenders to help students and families sort through their options. Many of the inducements paid by lenders were given to gain access to such lists, Kennedy's staff found.
Under his legislation, colleges would be required to describe why those lenders were chosen. Schools must select lenders based on competitive interest rates and other benefits for students.
Kennedy's measure also would require lenders to disclose to borrowers the terms of their loans, including interest rates, the types of repayment plans available and the lender's practices in the case of default.Labels: academy awards, career training, education online, financial aid, free college, free education, high school, scholarship, student loans, study abroad |
