Republican senators after voting Wednesday on the budget bill. From left: Wayne Allard of Colorado, Mitch McConnell of Kentucky, Judd Gregg of New Hampshire and Bill Frist of Tennessee, the majority leader. Doug Mills/The New York Times
Nearly one-third of all the savings in the final budget bill comes
from student aid, the Congressional Budget Office said Wednesday.
Under the bill, college students would pay higher interest rates on loans. Many
banks will receive lower subsidies. And the Education Department will work with
the Internal Revenue Service to ferret out students and parents who underreport
incomes on financial aid applications. The budget bill is estimated to save $39.7
billion over the next five years. Student aid accounts for $12.7 billion of the
savings, or 32 percent.
Not since 1997 has Congress made such an ambitious effort to slow the growth
of benefit programs. The legislation includes these changes:
¶States would have sweeping new authority to impose
premiums and co-payments on millions of low-income people covered by Medicaid.
States can also scale back benefits for many recipients.
¶For the elderly, it would be more difficult to qualify
for Medicaid coverage for nursing home care if they transfer assets to their
children or other relatives for less than fair market value.
¶Medicare would freeze payments for home health services
and reduce payments for medical imaging.
¶Welfare recipients would be subject to stricter work
requirements. States would be subject to new financial penalties unless they
put more people to work or further reduce the number of families receiving
¶Aid that helps states collect child support from absent parents would
The Bush administration worked closely with Republicans in Congress on provisions
that affect student aid. But Education Secretary Margaret Spellings declined
to comment until the bill cleared a final hurdle on Capitol Hill.
Republican negotiators said virtually all the cuts in student aid would be
borne by banks and other lenders, an assertion sharply disputed by Democrats
and college administrators, who said that two-thirds of the savings would be
at the expense of students and their families.
Even as it makes those cuts, Congress is creating a new program for students
from low-income families who are eligible for Pell grants. The amount of aid
will not be based on financial need. To qualify, students would have to be United
States citizens, have completed "a rigorous secondary school program of
study" and be taking courses full time at a "degree-granting institution
of higher education."
The student would have to maintain "a cumulative grade point average of
at least 3.0." Juniors and seniors will be eligible only if they have declared
a major in the physical or life sciences, computer science, mathematics, technology,
engineering or a foreign language deemed critical to national security.
College and university groups, as well as most Democrats, opposed the overall
"This is the biggest cut in the history of the federal student loan program,"
said David Ward, president of the American Council on Education, an umbrella
group for public and private colleges and universities.
A lobbyist at the council, Becky H. Timmons, said, "Students will be paying
higher interest rates than they are currently paying."
The rate would be fixed at 6.8 percent for students and 8.5 percent for parents.
The current rates, which vary with market conditions, are several percentage
points below those levels.
The new aid for freshmen and sophomores is known as academic competitiveness
grants. Freshmen would be eligible for $750 grants, and sophomores for $1,300
grants. Juniors and seniors would be eligible for $4,000 a year in what Congress
calls Smart grants. The name is an acronym for "science and mathematics
access to retain talent."
The Senate majority leader, Bill
Frist, Republican of Tennessee, said the new support for math and science
education would increase America's ability to compete in a global economy.
"China and India are generating scientists and engineers at a furious
pace while America lags dangerously behind," Mr. Frist said.
The bill would not change the maximum Pell grant, which has been $4,050 for
several years. President Bush had proposed a $100 increase. The bill would increase
the maximum amount of subsidized loans, to $3,500 and $4,500 for first- and
second-year students, from $2,625 and $3,500.
M. Kennedy, Democrat of Massachusetts, said the math and science program
would abandon the Pell grant principle that the neediest students should receive
the most help.
"Under this proposal," Mr. Kennedy said, "a single mother who
can attend college only part time because she has to work 40 hours a week to
put food on the table will not be eligible for a penny in new grant aid."
Republicans said the budget bill squeezed far more savings from banks than
from students. Representative John A. Boehner, the Ohio Republican who is chairman
of the Committee on Education and the Work Force, said the bill would increase
benefits for some students while saving money for taxpayers.
"Vast increases in federal student aid" have coincided with a decade
of tuition increases, Mr. Boehner said.
He suggested that federal investments in higher education had contributed to
"the college cost explosion that is squeezing the budgets of low- and middle-income
Representative George Miller, Democrat of California, said the Republican proposals
would make it even harder for many families to pay for college. About 70 percent
of the savings in student aid "come off the backs of students and their
families," Mr. Miller said