President's Student Loan Proposal: More Grant Money, Maybe Job Losses

President Obama’s push to get the banks out of subsidized loans could get more money to New Hampshire students.

Eric Lotke of the Campaign for America’s Future says about 5 billion dollars could be redirected next year to a program known as Pell Grants.

The average pell grant size will go up. It will go up to roughly 3, 200 dollars up in new Hampshire is what the average award will be.

Lotke says the increase in funding, though minimal, could convince more than 600 people in New Hampshire to attend college.

If the pell grant goes up a hundred dollars some of those students will jump the fence and say, ok, I’ll go in. and if it goes up two hundred dollars, some more students will jump the fence and say, ok, I’ll go in.

The President has proposed changing the Federal Family Education Loan Program.

The non-profit New Hampshire Higher Education Assistance Foundation or NHHEAF (Neef) has been arranging student loans under this program for years.

Tara Payne of NHHEAF says if the President gets his way it could spell the end of what NHHEAF does.

We are fighting for our lives here.

Payne says there are about 200 employees at NHHEAF.

She says similar organizations around the nation employ about 40,000 people.

Payne says all those jobs are in jeopardy for what the White House claims will be significant savings.

It seems like it will be less of a cost to go the route the administration is suggesting but really what is the true cost of eliminating 40,000 jobs around the country? …and losing the local organizations that are providing the outreach services to those communities.

President Obama’s plan would have more students get loans directly from the government.

Since the government has no profit motive, the interest rates would be significantly lower than a bank would charge.

Still, critics of the President’s plan say it doesn’t allow small players like NHHEAF to take any role in accessing loans.

Instead, the government would certify certain large companies or banks to service customers.

New Hampshire Banking Association president Jerry Little says that causes him to ask a couple of questions.

Where are our students and our families going to be directed to and will the great amount of distance and bureaucratic inertia that they will encounter serve them poorly or will it be a situation that in fact because of its scale and size it creates greater economies? And I don’t know the answer to the question….

Proponents of the changes sought by the President say they think there will be support for students and their families under the new setup.

But it is not clear if the measure will be able to make its way through Congress.

The House has supported it, but now it is in the Senate.

Many Republicans there oppose it, because they say it will cause government to grow too big.

Several Democrats have also been resistant, because they’re worried about bank jobs that might be lost.

But on the plus side, needy students would be able to get bigger grants.

And loans through the government would be cheaper.

It is not clear which side will carry the day when a vote comes.