December 9, 2005


Budget Cuts Will Harm Hispanic American Students

By Joe Belew

While teaching at a school for Mexican-American children, a young Lyndon B. Johnson became troubled by the realization that the majority of his students were too poor to pursue a higher education. Having been forced to drop out of college himself because of a lack of funds, LBJ recognized that if a white male in that era had difficulty paying for college, then poor Hispanics had no chance. When he became president of the United States years later, he sought to ensure that everyone had access to money for college, regardless of their socio-economic background. In 1965, he signed the Higher Education Act (HEA) and established the federally guaranteed student loan program.

Now in its 40th year, the private-public partnership that is the guaranteed loan program has proven to be one of the government’s greatest success stories. More than 50 million students have used the program to pay for college, and the percentage of the entire population with a degree has risen from 8% to 25% since HEA’s inception.

Regrettably, Congress is looking to reduce federal support for the program at a time when the government should be formally recognizing its many accomplishments. Proposed cuts could exceed $14 billion and undermine the stability of the loan program, now called the Federal Family Education Loan Program (FFELP). This threatens to make student loans less available, since nearly 85% of all U.S. schools and colleges use FFELP.

The timing could not be more inopportune for Hispanic American students. Within the next 10 years, one in every five high school graduates will be Hispanic. Not only will the majority of these students be first generation Americans, many will be the first from their families to have the opportunity to attend college. There are concerns that financial, cultural and informational barriers may prevent many talented young people from viewing college as a viable option. The continued upward mobility of the Hispanic American community is contingent upon overcoming these barriers by ensuring that there is enough financial aid to fund everyone’s higher education while also raising awareness that anyone can get the student loans they need.

There has been substantial investment in FFELP by lending institutions to develop services and outreach programs benefiting Hispanic American families. Bilingual materials, college preparation seminars, financial planning counseling, classroom workshops, presentations for community-based organizations and special scholarships have all been created to let students know that college degree are not out of their reach. Tragically, the continued development of these outreach programs may be at risk if there are deep cuts to student loan programs.

The U.S. needs to maintain an educated society to remain the world’s economic, technological and scientific leader. Because the Hispanic American population is growing at an accelerated rate, every effort must be made to see more Hispanic Americans in positions to assume leadership roles in all aspects of U.S. industry. Curtailing financial aid programs would hinder the cultivation of the nation’s brainpower, an ever-increasing percentage of which is located in the Hispanic American community. Cuts would signify a disinvestment by the government in the education of a significant segment of the population.

Since FFELP has consistently continued to improve its services and become more efficient, it is troubling that Congress would even consider making major changes to something that has worked so well. Students have equal access to funds for school, customer satisfaction is high, the program has been relatively free from fraud and abuse, and default rates are at record lows. In addition, the flexibility of FFELP has allowed it to easily accommodate a student population that has grown in size and diversity without becoming overburdened. In many ways, FFELP has gone above and beyond everything for which LBJ had hoped when he first saw the need to help his poor Mexican-American students. Hispanic American students should be alarmed that a program so well-positioned to help them achieve greater success is now being endangered.

Joe Belew is president of the Consumer Bankers Association.

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