House of Representative member Peter DeFazio of Oregon told University of Oregon students that it is the federal government’s role to make college affordable.
DeFazio discussed the Higher Ed Act, his proposed bill that would reform grants and decrease student loan debt, on campus on Monday. He said that leaving the job of college affordability to the private sector causes the government to lose money.
He said that when the government was subsidizing banks that were charging 8 to 9 percent interest on student loans, taxpayers got back 84 cents on the dollar. But when the federal government directly gives students lower interest rate loans, taxpayers got back $1.03 for every dollar.
“I don’t want to bankrupt students” DeFazio said among a panel of administrators and 12 students.
The Higher Ed Act (formally known as the Helping Improve Grants for Higher Education and Repayment of Expensive Debt) would do three things for university students. First, the act would raise the minimum annual salary level that determines when college students have to start paying back their loans from $17,655 to $26,482. Students would also not be charged interest before they start making payments.
Second, the act would increase Pell Grant awards from $5,815 to $9,410, and the awards would increase each year with inflation. Around 25 percent of UO undergraduate students receive a federal Pell Grant.
UO Director of Student Financial Aid Jim Brooks said that the bill would benefit the UO’s Pathway Oregon program, which provides full tuition to low-income Oregon residents, with the help of university and state funds.
“A major increase in Pell gives us a lot more flexibility,” Brooks said. “We can open doors a lot wider and offer more to students than we do right now.”
The grants will also be available year-round, which means that students would be able to use their financial aid as they take summer classes. In 2011, yearlong Pell Grants were eliminated by the Obama administration and Congress for being too expensive.
“The reinstitution of the full-year federal Pell Grant is going to change students’ lives here on campus,”  said UO senior James West from the audience.
“I haven’t been able to attend summer courses because I spend the whole summer working to be able to pay and afford fall, winter and spring term,” he said.
Third, the act will make all graduate students eligible for subsidized loans. In 2012, graduate students became no longer eligible for federal subsidized loans, which do not gather interest until after the student graduates. According to Brooks, only UO graduate students who demonstrate need can currently borrow subsidized loans and only up to $20,500 annually.
“Losing a subsidy of even half of that had a major impact on graduate students,” Brooks said. “I appreciate Congressman Defazio bringing [graduate student subsidy] back to the table.”
Of the 1,379 graduate students who borrowed student loans last year, all were unsubsidized. Out of those students, 1,348 could’ve had subsidized loans under the system prior to 2012.
For Anastasia Vali, a full Pell Grant recipient studying at Lane Community College and panelist at the event, the issues of college affordability that motivated DeFazio’s bill are linked with basic needs.
“Any student who has been in that situation (without or with partial Pell grant support) understands that sometimes you just have to go hungry,” she said.