Students from around the country met on Friday to draft legislation for a National Tuition Endowment which would create a scholarship trust fund by redirecting interest on student loans and eliminating waste in federal student loan programs.
This week, the House of Representatives is considering a deficit reduction bill that includes $15 billion in cuts to student loan subsidies. A similar bill was passed by the Senate last Thursday by a 52-47 vote. The Senate version cut student loan subsidies by $9.7 billion.
The NTE conference occurred as the House and Senate considered a deficit reduction bill that would cut $15 billion in federal student loan programs-namely, by cutting subsidies to private lenders, which would effectively increase interest rates for students taking out loans. However, the Senate bill would also increase student aid by $8 billion, while the savings in the House bill would go to other things.
The House bill is currently being debated in the House of Representatives.
According to NTE executive director Nate Walker, TC '05, the authors of the NTE will continue working on the bill for the next couple of months, while they continue to build grassroots support. In January, they will try to get formal sponsorship of the bill from members of Congress.
"All the money generated from interest from our loans is not returned to us. It's lost in the federal system," said Walker. Walker founded the NTE along with Baranda Fermin, TC '05, out of concern that rising tuition costs place an excessive burden on students and that current federal student loan programs are inefficient.
"The cost of education is so high that people see the price and say 'I'm not even going to try,'" Walker said. "It creates a division, and this segregation is essentially economic."
The conference consisted of an opening dinner on Thursday night and a bill-writing session on Friday, which took place at Barnard. The guest speaker at the opening dinner was Michael Dannenberg, director of Education Policy for the New America Foundation, and a former senior education counselor to Senator Kennedy.
"In the Senate, I'm outraged at the inefficiency and corruption in higher education financing. So much of the system exists for students and in fact serves others," Dannenberg said. "There's an idealism of students trying to take control of a system that doesn't always serve them very well."
"One of the great things about the NTE is to wall off this money and make sure it doesn't go to deficit reduction, tax cuts, Iraq," Dannenberg added.
The conference included representatives from the American Student Association for Community Colleges, Minnesota State College Student Association, State PIRGs, United States Student Association, Princeton, Yale, Barnard, and Columbia.
NTE project director Matan Ariel, GS '06, stressed the importance of having people come together to draft the NTE legislation.
"There was a lot of interest and support, but people said "show us the actual bill." So today we had people come together to write it," Ariel said. "We want as many groups and individuals as possible to have ownership over this bill."
The proposed bill outlines income, savings, delivery, and eligibility. Income would come from interest on student loans and revenue on loan consolidation in the federal Direct Loan program. Savings would come from removing fixed rates for educational bonds, prohibiting the recycling of educational bonds, eliminating interdepartmental taxation of the Department of Education, eliminating default subsidies for private lenders, and reducing subsidies to guarantee agencies.
NTE scholarships would be delivered in the same manner as Pell Grants, and eligible students would include all low-income and middle-income undergraduates who are enrolled at least half-time in two or four year colleges.
"It really is a struggle for a student to continually have increases in tuition. The funding runs out, so you resign yourself to huge loans," said Amy Bothun, the Midwest representative of the American Student Association of Community Colleges. "I'm going into education, so I will have a huge debt for a middle income range job. It's discouraging."
Bothun attended Minnesota State College, a two year community college, and is now enrolled at Minnesota State University. In the time she has been attending college, she has seen a 42 percent increase in tuition.
In order to build grassroots support, the NTE is trying to get endorsements from student governments around the country.
According to M.A. Moutoussis, Barnard SGA president and a former NTE director, Barnard was the first college to endorse the NTE, in the spring of 2004.
"When I heard about NTE and the loopholes [in federal student loan programs], it shocked me, enraged me, and then got me really excited about the potential of what this could accomplish," Moutoussis said.