Students struggling to pay for college will get some help through a federal financial aid bill tied to the healthcare package.
That bill will boost federal Pell Grants and lower the cap on federal student loan repayments to 10 percent of discretionary income, down from 15 percent. Community colleges could apply for money from a $2 billion fund set aside for education and career-training programs.
The U.S. House of Representatives approved the Student Aid and Fiscal Responsibility Act on Sunday when it passed the Health Care and Education Affordability Reconciliation Act by a 220-211 vote.
The Senate approved the legislation Thursday and moved it back to the House for a final vote. The bill will become law once President Barack Obama signs it as expected.
Supporters say the financial aid piece represents the single largest investment in federal student aid in U.S. history.
University of North Texas sophomore Travis Trawick said he works 21 hours a week as a student assistant on campus. He said he is looking for a second job so he can graduate with as little debt as possible. He said getting loans through banks can be difficult because of the credit crunch.
"If the government can find a way to increase their federal loans, then I think that's definitely a good step," said Trawick, who has college loans.
Pell Grants will increase from a maximum $5,350 this school year to $5,550 next school year and then to $6,130 by 2017-18. The grants go primarily to students from low-income families: Most recipients during the 2005-06 school year were from households with annual incomes of less than $30,000.
"That's good news for low-income students, certainly, and would help them afford going to college," said Troy Johnson, a UNT vice provost.
And the federal Income-Based Repayment program, which caps monthly payments at 15 percent of discretionary income, will drop the limit to 10 percent for new borrowers after 2014, said Melissa Salmanowitz, press secretary for the House Education and Labor Committee.
The money for the Pell Grant boost and other federal programs will come from eliminating subsidies to private banks to act as middlemen on student loans, Salmanowitz said.
The Congressional Budget Office estimates that ending those subsidies will save $61 billion over 10 years.
"Basically, it's switching us from the type of loans we had been offering to the new direct student loans," said Mike Scott, director of scholarships and student financial aid at Texas Christian University. "But as far as access to funds for students, it will be the same."
TCU made the switch this spring semester to the federal Direct Loan Program, so named because the loans come directly from the Education Department.
After the recent financial crisis, some private lenders were having difficulty raising money for student loans, Scott said.
TCU wanted a more stable lender rather than risk loans with companies that might fail to fund them.
"Our first priority is going to be making sure that the kids that are at our school get the money when they need it," Scott said.
UNT in Denton made the switch last fall, Johnson said. Texas Woman's University and the University of Texas at Arlington will make the switch this summer.
Some students may be asked to sign new documents on their loans, which are funneled under several names.
"There's very little impact within" Texas Woman's, said Governor Jackson, Texas Woman's financial aid director.
"The only thing that would be additional in terms of requirements for students is that all students who are borrowing through the Stafford Loan program and parents who are borrowing through the parent loan program or graduate students who are borrowing through the graduate PLUS program would have to sign a new master promissory note," Jackson said.
They may also have to go through an online financial aid tutorial.
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