According to The Chronicle, "Proposals to relax certain rules that proprietary colleges must follow to participate in federal student-aid programs and changes in the government's loan-consolidation program that would make it less attractive to borrowers are expected to move forward."
The article further notes that just once day after the election, the share price of Sallie Mae, a loan company, rose 10.3 percent.
Many liberals criticize the expected long-term effects of the President's agenda on programs such as student aid and research and development. The Bush Administration's plan to implement further tax cuts and keep up troop levels in Iraq has some fearing a "squeeze" on other areas of domestic or internal spending.
In The Chronicle, Edward R. Kealy, the executive director of the Committee for Education Funding, emphasized that the election "will definitely strengthen the President's push to rein in federal spending, including education. It is going to put education advocates to the test."
In order to rapidly produce results, the Bush administration will begin pushing legislation through Congress in 2005. Reforms such as the Higher Education Act are expected to come early next year. According to The Chronicle, the role of the Act is to govern federal student-aid programs.
The implementation of the Act will offer tremendous gains to for-profit colleges and loan companies. "On the campaign trail, Mr. Bush promised that he would push Congress to relax a rule that requires a for-profit college to receive at least 10 percent of its tuition and fee revenue from non-federal sources," wrote Jeffrey Brainard in The Chronicle.
According to Joe Case, the dean of financial aid at the College, the elimination of the "90 percent rule," which currently restricts institutions from deriving more than 90 percent of their income from federal sources, will benefit for-profit schools. "For-profit schools would benefit from the lifting of the limitation, which was initially put in place to address concerns about fraud and abuse in the federal student aid programs," he said. "Other institutions would be largely unaffected."
The presidential campaign left many in the student loan industry feeling nervous about the changes John Kerry may have advocated. "Lenders suspected that Mr. Kerry and his running mate, Senator John Edwards of North Carolina, would have tried to reinvigorate the competing direct-loan program, which provides federal loans directly to students through their colleges," wrote Brainard. President Bush is not likely to call for eliminating direct lending, according to The Chronicle.
Case predicted that there will be few changes in the current student loan provisions at the College due to policies of the Bush administration. "Some believe that the Bush Administration might ask for a termination of the Federal Direct Student loan program in favor of the banker-as-middleman Federal Family Education Loan (FFEL) program," he said. "While that would be welcome by the lending industry, it is unlikely to happen because such a change would add to federal expenditures. The Direct Loan program does not entail a 'special allowance' paid to FFEL lenders since the loans are drawn directly from the federal treasury. Shifting that loan volume, about 40 percent of loans, to the FFEL program would significantly increase the cost of the loan program to the federal government."
In describing the effects the Bush administration's plans may have on the College, Case spoke of the "phasing out of guaranteed funding levels in the federal 'campus based' programs."
"The proposed change would reshuffle the funds from some institutions-mainly from large universities, both public and private-to others-mainly proprietary schools and community colleges. The allocations would be on the basis of an institution's students' need relative to total national need, instead of a procedure that underwrites earlier funding patterns before any extra funds are allocated on a proportional 'fair share' basis," Case said. "Amherst receives 'fair share' allocations in excess of the guaranteed levels currently, and probably would be unaffected by the proposal."