Bowdoin students on financial aid may soon find themselves $500 richer.
The College Cost Reduction and Access Act, passed last week in both houses of Congress, seeks to lighten the burden of some college students on financial aid.
Congress will cut federal subsidies paid to private college loan lenders. Utilizing these extra funds, the government will then allocate roughly $20.9 billion to college financial aid programs in the form of Pell Grants and Stafford loans.
According to Steve Joyce, director of financial aid at the College, this approach to grants is nearly unprecedented, though undoubtedly a step forward.
"Historically, college costs have always increased," Joyce said. "As these costs rise, there is a need for additional financial resources coming from not just parental contribution but from colleges, the state, and the federal government."
Bowdoin students with Pell Grants may be affected by the law as early as next year, with allocations of up $500. Approximately 11 to 12 percent of Bowdoin students currently receive Pell Grants.
Dean of Admissions and Financial Aid William Shain said that an increase in federal financial aid through Pell Grants will free up Bowdoin grants, enabling funds to be allocated elsewhere.
Joyce added that extra funds can be spent in a variety of ways.
"They can be used to reduce the amount of student loans or replace loans with grant dollars," Joyce said.
Joyce also foresees an increase in the number of students receiving Pell Grants at the College next year.
Though the act provides immediate financial aid through the upcoming increase in Pell Grants, it also has a more long-term component?reducing Stafford loan interest rates in order to make debt relief more affordable.
Stafford loan interest rates will be cut in half over the course of four years, from 6.8 percent to 3.4 percent. This is significant, according to Joyce, because as interest rates go up, students borrow more. Once this act is implemented, students can pay more in the principal loan rather than rack up interest.
"They can borrow without the fear of borrowing too much," Joyce explained.
In addition, borrowers may have their loans eradicated after 25 years if they are in economic hardship or in public service employed professions.
According to Joyce, the average debt for Bowdoin students is $19,000, while the average monthly payment is $130.
"If implemented correctly, this can affect Bowdoin students in a positive way, especially since the amount of students borrowing and how much they borrow has become a bigger problem," said Associate Director of Student Aid Gary Weaver.
"This is a wise decision on Congress's part," Weaver said. "The reduction of interest rates from 6.8 percent to just 3.4 percent in four years is a big change."
However, others, including Shain, caution that the changes are only modest.
"The direction is thoughtful, but it's too early to expect dramatic results," he said.
First years Sean Campos and Kyle Dempsey are also skeptical. Dempsey, a Pell Grant recipient, feels that even with the increase in grant money, the price of attending Bowdoin is still overwhelming. "In the grand scheme of things, $500 is literally pocket change," Dempsey said.
"It's nice to know that it'll be working, but I think the whole college cost situation is so bad that it will need more support than this," Campos said. "It's just a stepping stone, not a complete solution."