The ASUW Senate plans to discuss a resolution today that supports a Congress bill that, if enacted, will take away federal subsidies from private lenders and allow the government to use the extra funds to increase grant money for students, among other education investments.

“Increased student grants will improve the lives of students on this campus,” said Kay Lewis, assistant vice president for Student Life and director of the Office of Student Financial Aid and Scholarships. “They won’t have to borrow more, and they won’t have to work as many hours in order to go to school here.”

The freed-up money for grants is the result of eliminating one of the two federal programs that provide student loans.

The two programs currently in effect are the Federal Family Education Loan Program (FFELP) and the Direct Loan Program (DLP). Under the FFELP, federal subsidies are granted to private bank lenders who, in turn, offer loans, whereas the DLP offers direct federal lending to students.

The Student Aid and Fiscal Responsibility Act of 2009 (SAFRA), which was passed in the House of Representatives Sept. 17 with a 253-171 vote, aims to end the FFELP and use the savings from halting those subsidies to expand federal aid to college students, as well as to fund other education programs.

“I think [the SAFRA bill] would change the system for the better in that all students will be able to have an easier way of getting their student-loan funds, and the government’s limited money that they have for financial aid could [be] used for improving grants for students,” Lewis said.

According to an article in The New York Times, the Obama administration said that the shift to direct federal lending would save more than $80 billion over the next 10 years, which would then be used to increase Pell grants for low-income students, fund new investments in community colleges, and support other early-education efforts.

At any given year, there are about 19,000 UW students borrowing from student-loan programs, Lewis said. Moreover, it is estimated that there are about 13,500 UW students participating in a grant or scholarship program during the 2009-2010 school year.

If the SAFRA bill is passed, UW students who take out government-funded loans may not be affected by the shift to direct federal lending because the UW has chosen to participate solely in DLP since 1993. However, students that are eligible may be benefitted by the provision of the bill that aims to expand Pell grants.

“[The bill would] boost that Pell-grant purchasing power in ways that they haven’t been able to do before,” Lewis said.

However, even prior to the passage of the SAFRA bill, the UW has already seen a significant increase in government-funded grants. Between the 2008-2009 school year and the current school year, overall Pell grants have increased from $25 million to $38 million and Washington State Need Grants have increased from $36 million to $41 million. One reason for this boost in federal funding is that more students have become eligible for these grants due to the economic downturn, Lewis said.

Apart from the financial provisions of the SAFRA bill, Eric Shellan, assistant director of the Office of Government Relations and sponsor of an ASUW Senate resolution, said that UW students should support the bill for its long-term implications.

“If community college and programs like that are supported more, it would help the UW because there are stronger transfer students and there’s more options for higher education in general, which just makes a more competitive system,” Shellan said.

It is unclear as to when the SAFRA bill will be voted on in the U.S. Senate. The process is on hold until the result of the health-care bill has been decided.

Lewis, who has spoken on behalf of the SAFRA bill in Washington, D.C., said that this wait may be a cause for concern.

“The longer they wait,” she said, “the more the loan industry tries to lobby for no change or not as much of a change.”

Reach reporter Joanna Nolasco at news@dailyuw.com.