Elect Ron Kind for Congress - Wisconsin Third Congressional District

Kind: Overhaul system for student loans

The House last week approved sweeping changes to the student loan system, an overhaul Republicans see as more government intervention and Democrats insist will lift the burden of crippling debt off students while cutting into the national debt.

The Student Aid and Fiscal Responsibility Act was approved Thursday, 253-171, largely along party lines, and establishes a deadline of July 1, 2010, for all American higher education institutions to switch their loan systems over to the federal direct loan plan.

U.S. Rep. Ron Kind, D-Wis., voted with fellow Democrats, calling the act "the single largest investment in aid to help students and families pay for college."

"The passage of the Student Aid and Fiscal Responsibility Act will not only help a student graduate with less debt, but stabilizes the student loan program, invests in education, and helps build a stronger, more competitive American economy while reducing the national debt," Kind said in a news release.

Kind asserts the current government program that subsidizes private lenders to provide students loans while guaranteeing payments no longer works.

"The new loan program can be run at a lower cost, saving taxpayers money, and will be more stable, guaranteeing students access to aid in any economy," Kind said.

Republicans argue the act amounts to a government takeover of the program, and could prove a failure.

Kind counters that funds available under the bill will help more students and leave them with less debt.

"Over the next 10 years, the bill invests nearly $500 million in Pell Grants to Wisconsin students, increasing the number of students receiving grants by 75 percent and doubling the amount of funding for grant awards," Kind said. "Funding from this bill will also strengthen the Perkins Loan program by offering lower interest rates."

The bill also establishes the Direct Loan program, what Kind and proponents describe as a less expensive and more streamlined option, to be run by the Department of Education.

"Funded directly by the government, parents and students won't have to worry about whether or not fluctuations in the financial market will hurt their access to low-cost student loans," the lawmaker said.

The private lending industry will continue to play a role in a public-private partnership by servicing loans; but Kind says by eliminating the lending middleman, the new program will save taxpayers $87 billion over 10 years.