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Visual Guide to the Student Aid and Fiscal Responsibility Act

Rep. George Miller introduced HR 3221—the Student Aid and Fiscal Responsibility Act (SAFRA)—in the House of Representatives last week. This bill would represent the largest investment in higher education in US history while managing to reduce the deficit, and is designed to take a big step toward President Obama’s pledge to make the US the most educated country in the world by 2020. The bill, which closely tracks a proposal by the Obama administration, would eliminate wasteful subsidies to student loan companies, and use the $87 billion in savings to make college more affordable, accessible, and effective.

This is a big piece of legislation with many provisions, and there are a few parts of the bill that should be strengthened, even if it is on the whole one of the best higher education proposals we have seen for a very long time. Rather than a dry, colorless factsheet, we thought some expressive faces would help to explain the bill’s pros and cons.


SOURCE: Flickr / valkiribocou

More & Larger Grants for Students

SAFRA invests $40 billion to increase the maximum Pell grant award to $5,550 by 2010, and $6,900 by 2019. A recent report by US PIRG and the Institute for America’s Future estimated that this would mean an additional 260,000 students receiving Pell grants, and larger grants for existing Pell recipients.

More Reliable Grants for Students

The value of the Pell grant relative to college costs has decline precipitously during the past few decades. SAFRA would help the grant keep up with college costs by creating a floor below which the maximum grant level must not fall—inflation plus 1%. This will make the grant more reliable for students and families.

Makes Subsidized Stafford Loans Variable Below 6.8%
In 2007, Congress slashed interest rates on subsidized Stafford loans, but these reforms are set to expire in 2012, causing the interest rates on these loans to jump from 3.4% to 6.8%. SAFRA would make the interest rate variable, but cap the rate at 6.8%, which means borrowers will be able to benefit from low interest rates while being protected from high rates.

Access, Completion, & Quality

Invests in community colleges and Minority-Serving Institutions

SAFRA would create a competitive grant program for community colleges to create programs that would improve completion rates, improve instruction, create partnerships with employers, and implement other reforms. It will also invest in modernizing community college facilities and create a grant program for the creation of quality online college, high school, and job training classes. The goal is to graduate an additional five million students during the next ten years. Finally, it would invest billions in minority-serving institutions to expand the number of minority STEM graduates and other purposes.

SOURCE: Flickr / jili’m

Invests $2.5 Billion in State and Federal Programs to Improve College Access and Completion Rates

SAFRA will invest these funds in the College Access Challenge Grant program, which funds state, local, and federal projects that help get low income students ready for college, able to navigate the admissions and financial aid process, and earn their degrees. In addition, these funds will be used to support programs at both the state and institutional level to that focus on improving college completion rates and financial literacy.

Reforming the Federal Financial Aid Programs

SOURCE: Flickr: ntrolls

Save $87 Billion by Cutting Wasteful Subsidies to Loan Companies

Right now there are two different federal programs that award the same types of loans to students: the Federal Family Education Loan program (FFELP), and the Direct Loan Program (DLP). The FFELP has consistently been found to be more expensive to taxpayers than the DLP, since it uses subsidies and loan guarantees to persuade loan companies to act as middlemen. The FFELP is also more prone to corruption, backroom political deals, and instability during economic crisis (as we have seen recently). SAFRA would originate all future federal loans from the DLP.

SOURCE: Flickr / Andy*Matthews

Offers no-bid Contracts to State-Affiliated Lenders to Service Student Loans

In order to win support from lawmakers with powerful non-profit loan companies in their state, bill authors included a provision that would award these lenders no-bid contracts to service student loans. Each company would automatically get to service the loans of 100,000 borrowers or every borrower in their state (if the state has fewer than 100,000 borrowers), and in some states there would be more than one eligible lender. Students and taxpayers would be better served if servicing contracts were based on a bidding process based on cost and quality, rather than political calculation. One lender that may be eligible was recently featured in the Students Over Banks Hall of Shame.

SOURCE: Flickr / dan mogford

Simplify the FASFA Form

SAFRA would finally make the FASFA less of an onerous burden on students and families by removing unnecessary questions and allowing families to use information from their tax returns to fill out some parts of the application.

Reduce the Deficit

SAFRA will direct $10 billion saved from cutting wasteful subsidies to student loan companies to the US Treasury in order to pay down the deficit.

The top 20 lenders have already spent $4,665,000 on lobbying since January, and they represent only a miniscule fraction of all student loan companies. They strongly opposed this legislation, so Congress needs to hear from you—take action now at

Pedro de la Torre III is a former Advocacy Senior Associate at Campus Progress.

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