Student Aid and Fiscal Responsibility Act of 2009 Press Conference

Yesterday, CEF attended a press conference for the Student Aid and Fiscal Responsibility Act of 2009 (SAFRA).

The bill aims to expand Pell Grants, Direct Loans, community colleges, and early childhood education. At the press conference, the podium was surrounded by college students supporting the bill. The student wore t-shirts bearing their colleges’ names while holding signs that said things like “I can’t afford college” and “subsidize students, not banks.” The Chairman of the House Committee on Education and Labor, George Miller (D-CA), began speaking about the bill. He said that the $87 billion invested in SAFRA would make college more affordable, create more community colleges, make the student loan program easier, and help pay down the deficit. Chairman Miller’s argument for the latter point was that the bill would save $87 billion over the next ten years.

US Education Secretary Arne Duncan spoke next about how President Obama agrees with the goal of improving education. Secretary Duncan noted that 25 years ago the US led the world in producing college graduates and that this is no longer the case. He demonstrated concern not just for the college age students receiving Pell Grants but also for smart fifth and sixth graders who he worried might lose their dreams of going to college because it has become so unaffordable. Secretary Duncan argues that the expanded Pell Grant spending in SAFRA will keep these students’ dreams alive.  Arne Duncan also spoke on the community college expansion portion of the bill. He noted how community colleges were unpolished gems that were needed to keep the economy alive. Not only do they serve new students, but they also help train the unemployed for new careers. Duncan brought up that SAFRA will not cost a single taxpayer dollar; rather, it is a reinvestment that will stop subsidizing banks and start putting kids in college. He also stressed the need to focus not just on getting kids into college, but getting them to graduate as well.

Several congressional leaders stepped up to the podium after Secretary Duncan. Congressman Rubén Hinojosa (D-TX), chair of two education subcommittees, described the low graduation rates among American high school students. He argued that the bill will increase graduation rates, especially among minorities. Then Speaker of the House Nancy Pelosi (D-CA) told the crowd how education is one of President Barack Obama’s three pillars of economic growth. Speaker Pelosi argued that education will strengthen our democracy and that it’s the best investment the United States can make in its
citizens. Speaker Pelosi said that this bill is the biggest education spending bill since the G.I. bill, yet it will save taxpayers $10 billion in the long run.

Nancy Pelosi brought up that higher education has been unaffordable; she was followed on the podium by college student Jelisa Difon. Ms. Dilfon is a senior at the University of Massachusetts-Amherst who described her struggles with paying for college since her freshman year. She’s had to hold several jobs while at college and still has over $40 thousand in debt to student loans. Ms. Dilfon told the crowd that she recently received a letter from Sallie Mae alerting her that her loan’s interest rates had been increased. When Congressman Tom Petri (R-WI) took the podium, he mentioned that the guaranteed loan program currently in place costs taxpayers while Direct Loans program in the SAFRA bill saves money. Representative Petri has supported Direct Loans since the Clinton administration.

Representative Tim Bishop also spoke at the SAFRA press conference. He brought up how this bill will help students because it will maintain the time value of Pell Grants by adjusting for inflation. Congressmen Bishop noted that it will also make the financial aid process simpler while saving taxpayer money. He stressed that education is an obligation of the United States; this isn’t surprising because the Committee for Education Funding is awarding Representative Bishop the William H. Natcher Award at our 2009 Gala. This award is for his dedication to elevating the priority of education funding to ensure better opportunities during this session of Congress. Congressman Bishop will be at the Gala on September 30^th to accept the award. Bishop noted that he is optimistic that SAFRA will pass this week. The bill passed rules today and will be debated today and tomorrow, September 17^th, when it is expected to be voted on in the House of Representatives.

—————-

Posted by Sandy Ginsburg

CEF Intern

Cornell University class of 2011

More State and Local Budget Cuts Harm Schools

I recently blogged about how schools all over the nation are suffering from state budget cuts.

According to National Access Network, the actions continue.

• The State Department of Education in Mississippi is cutting over $100 million. As a result, Jackson Public Schools and Desoto County Schools each have to cut over $6 million.[1]
• 68 of the 139 public schools in Nashville, Tennessee have textbook shortages.[2]
• In Homer, Alaska, $1.3 million in budget cuts will result in the school closing its library on Mondays and shutting down part of its campus.[3]
• An overburdened city budget in Cranston, California is causing schools to cut back on books and teachers.[4]

K-12 education funding appears to be dwindling away, and the potential for more budget cuts looms.

• In Michigan, Governor Jennifer Granholm proposed to cut school budgets by $290 million a year for three years starting in 2011. While she plans to cover part of that with $800 million in stimulus money, the school budgets are still cut by a net of $70 million.[5]
• The state of Alabama looks to cut its main source of funding for public schools and colleges by $344 million in 2010.[6]
• A $9.5 million levy will be up for a vote on November, 3^rd in Streetsboro, Ohio. If it doesn’t pass, school budgets will be cut by $461,000. Not only would this likely result in 20 teachers losing their jobs, but students living within 2 miles of the school would not receive busing service in the winter.[7]

While education funding is often considered a national priority, it’s clear that school budget cuts are big issues at the state and local levels as well.

———————

Posted by Sandy Ginsburg

CEF Intern

Cornell University Class of 2011

Education is Severely Underfunded in Several States

Today’s speech by President Barack Obama’s on education at Wakefield High School in Arlington, Virginia focused on students working harder to improve their grades.[1] And so it should have. It was an address to America’s schoolchildren; not to policymakers. In fact, a big reason the speech was predicted to be controversial was because Obama’s opponents assumed he was going bring up policy issues facing schools today. It’s irrational to think the President would give the same sort of speech to school kids that he’d give to members of Congress or voters; however, there is in fact a serious education policy issue that the President should address: school funding.

Sure, I may be biased to think that education funding should be a priority; after all, I am an intern at the Committee for Education Funding. Still, not every state education funding system is as good as New Jersey’s, which isn’t perfect itself.[2] In fact, a majority of states are cutting education funding one way or another. Recently, 25 states cut funding fro K-12 or early childhood education and 34 states cut funding for higher education.[3] While the billions of federal stimulus dollars pumped into education helps, schools are still facing problems because of deficits at the state level. Unfortunately, this results in schools laying-off teachers, thus increasing class sizes.[4] This doesn’t even begin to tell the horror stories. In Georgia, thousands of teachers are being forced to go on furlough due to the state’s deficit. This means they either have less time to plan lessons or they work without pay for a few days.[5] In California, public schools are so desperate for funds that they are seeking sponsorships![6] As much as the idea of schools using the private sector to get additional funding intrigues me, schools should not be in such a bad situation that they have nothing else to turn to.

The battle for education funding is not only in state legislatures. In fact, struggles to fund schools have found their ways to the court system. Unfortunately, in Missouri this resulted in the court’s rejection the State Board of Education’s request of $905 million needed to fund the Missouri’s schools on state constitutional grounds.[7] However, court cases involving education funding are not always a bad thing; they just tend to take a lot of time. New Jersey’s education financing system took decades to get through the courts but it paid off—and the argument was based off of the state’s constitution. Currently, the state of Washington is undergoing a legal battle to send more funding to poor schools that has been underway for 30 years. The details of the Washington case are eerily similar to New Jersey’s[8], so hopefully it will end well. Still, it remains clear that the United States of America needs more funding for its schools.

Posted by Sandy Ginsburg
CEF Intern
Cornell University Class of 2011

---

[1] For the full text of Obama’s speech see: http://www.krdo.com/global/story.asp?s=11086441

[2] I wrote an extensive paper on New Jersey’s education financing system, which gives the state’s poorest districts as much funding as the richest ones. Feel free to email me (slg228@cornell.ed Read more

The Effects of Student Loans

Wall Street Journal Article on Student Debt

This article explains the effects of college loans on students: an overburden of debt after graduation. Continue reading below for more analysis.

——————————————————–

As I mentioned in my last blog post, college prices are rising. I attributed this increase in price to Pell Grants, which are government vouchers to low-income students that don’t need to be repaid. The Wall Street Journal offers a different cause for the increase in the price of college: student loans. In many ways this makes more sense than my argument. While Pell Grants are limited to students of a certain income level, anyone can access students loans. So while Pell Grants may have increased the price of higher education due to an increase in demand among low income students, student loans increased the demand of all students.

And why shouldn’t student loans increase the demand for higher education? Student loans give families of all income levels the ability to send their children to the colleges of their choice regardless of their financial situations.  Without loans, many students would end up compromising on their education because of the current economic recession. However, graduating with debt is never good for students, especially in a tough job market. That’s one of the benefits of Pell Grants, scholarships, and other non-loan forms of aid: students don’t have to worry as much about debt.

Student loans and Pell Grants provide an additional benefit: reducing the deadweight loss associated with the positive externality of education. In other words, higher education does more for society than simply satisfying the desires students and schools. It improves the economy in the long run by creating a more productive work force. It trains people to be better at their jobs. It creates research that can cure diseases, create more effective means of communication, and create useful technologies. Therefore, the amount of higher education that students demand and colleges supply is less than society as a whole demands (or, in economic terms, a positive externality).

How can we solve this problem of not enough people getting an education? President Barack Obama can deliver a motivational speech to the nation’s school children, as he did today. Or colleges, universities, the government, and the private sector can provide scholarships and loans that give students the ability to pay for college one way or another.  Even though grants may raise the cost of college and loans may give students problems when they graduate, the result of more kids going to college is worth it.

After all, even President Obama had to pay off student loans.

Posted by Sandy Ginsburg
CEF Intern
Cornell University Class of 2011

Hotsheet – August 2009

To read CEF’s latest Hotsheet click here.