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Senate passes bill to expand student aid


WASHINGTON -- The Senate voted yesterday to expand federal student aid programs for middle-income families while moving simultaneously to reduce the rising number of defaults on government-backed student loans.

By a 93-1 vote, senators approved legislation that would raise limits on so-called Pell grants to $3,600 per student beginning Oct. 1 -- from $2,400 now -- and would make them available to families earning up to $42,000 a year, up from $30,000 now.

To help keep pace with tuition costs, the measure would increase limits on federally guaranteed student loans (known as Stafford loans) to a maximum of $23,000 for four years of undergraduate education. The maximum now is $17,250.

The legislation passed yesterday was only an authorization bill; Congress would have to pass an appropriation bill before the money can be spent. The House is working on its own version of yesterday's measure.

If lawmakers appropriate the full amount, the Senate legislation would pave the way for an increase of $5.5 billion in the $12 billion a year that the federal government now spends on financing higher education.

The legislation also contained a provision designed to end the practice of forcing families to include the value of their homes or farms in seeking to qualify for grants or loans.

Under the bill passed yesterday, applicants could omit the value of homes and farms in listing family income.

The new limits set for guaranteed student loans under the Stafford program would be $3,000 per student during each of the first two years of undergraduate school, and $4,000 during each of the last three. The limit now is $3,000 for the first two years and $3,500 for the remainder.

The new measures to help crack down on defaults would mark an escalation in the government's growing war on loan losses, which have climbed to a net 10.3 percent and are costing the government $3.6 billion.

Essentially, they would require state authorities, who administer the student aid program, to ride herd on educational institutions with large numbers of defaults.

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