With the recent downward spiral of the economy, the average college student’s budget can be among those most affected by a slump. But potential hope for struggling students recently appeared in the form of legislation that reportedly betters and increases student federal loans.

President Bush signed the Higher Education Opportunity Act of 2008 (HEOA) into law in August, officially reauthorizing the decade-old act that is the nation’s primary higher education law.  The new law is estimated to cost only about a $1 per American in 2008.  The law’s main purpose is to improve the federal aid and loan program by increasing money made available to students. 

The new law increases the amount the federal government may contribute to grants and loans, such as the Perkins Loan and the Pell Grant. 

Even with the increase in finances available to students who use  Perkins Loans, the interest rate will stay fixed at the lowest rate available for any student loan: 5 percent.  Increases in the loan’s limits to $5,500 for undergraduates and $8,000 for graduates and increases in allotment for textbooks to $600 will be applied July of 2009.  Requirements for deferring payments, discharging certain loans and rehabilitating loans have also surprisingly eased with the new law.

The federal government’s Pell Grant has also increased available money for students, with the maximum rate of $6,000 in 2009 increasing annually to a stop at $8,000 in 2015.  The law also rewards colleges that limit their tuition increases by granting additional money in the form of a Pell Grant. 

For Randy Ulses, the senior associate director of financial aid at the University of Cincinnati, the increase in the maximum rates of Pell Grants may be the most positive change.

“Increasing the maximum amounts shows government’s realization that it is getting harder for people to attend college,” Ulses said. 

Students who are from low-income families, minority groups or considered to be disabled or veterans (immediate family of vets are included as well), are expected to reap the most benefit.  Making funding more available to these students and strengthening tailored support programs like GEAR UP, will be the factors that determine these students’ ability and desire to stay in college according to HEOA.

Simplification of the previously tedious and long Free Application for Student Aid (FAFSA), is said to be a small benefit of HEOA.  The FAFSA Web site is now more streamlined and the application for low-income families is down to two pages.

The new law does not stop at only improving federal aid for students.  HEOA is changing the policies of colleges nationwide. 

One big policy change in lieu of HEOA consists of the requirement that colleges across the nation must to do more to curb their tuition increases. The new requirement makes colleges more accountable for increases and the rationales behind them. 

The law even takes a step toward making colleges and universities more sustainable and energy-efficient. The first National Higher Education Summit on Sustainability will be convened to explore ways colleges can implement more environmentally friendly practices thanks to HEOA.  A new federal grant program is also expected to help these institutions make these sustainability practices more of a reality.

How college campuses handle disasters and safety concerns are addressed as well.  The law attempts to help campuses add better emergency system technology and more definitive disaster plans, by requiring reports to the government.

With these sweeping policy changes that colleges must adhere to, changes within financial aid departments are inevitable.

Ulses admits that the numerous policy changes and requirements can be “administratively burdensome.”

“When you have a sweeping law like this, it requires the office to look at what they’re doing and realign accordingly to fit the new provisions,” Ulses explains.

Although HEOA will transform many things within UC’s Financial Aid Department, the transition will not be too hard.  The law doesn’t come into full affect until July 2009, which allows the department time to adjust. 

The law’s supporters also allude to possible implications on the future of the U.S. economy and workforce after it takes full effect. Supporters of HEOA hope to potentially increase student interest in technological, public service and science-based programs by establishing benefits made just for them. Supporters hope with better recruitment of expert faculty in needed fields and with HEOA providing special loan benefits for students who graduate in the fields, more students will turn to the ‘public service’ fields.

The special loan benefits include a higher loan forgiveness limit implemented by HEOA for the qualified students who work in ‘public service’ or science based jobs upon graduation.  The public service careers that are considered include a wide range of jobs such as public defense, nursing, education and military service.  The expansion of the loan forgiveness program still contains a variety of requirements for a given job to qualify and is tailored to specific jobs.  For example, teachers who work in a school district considered to be made up of low-income students may qualify for loan forgiveness with the amount waived increasing annually with continued employment to that school. Exact requirements for specific jobs are available at studentaid.ed.gov.  

Even with a basic outline of what and whom HEOA affects, Ulses makes it clear that the full implications of HEOA cannot be determined yet. 

“We won’t know the full effect of the bill until it takes effect [in July 2009],” Ulses said.  

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