June 28, 2004

WASHINGTON -- Emily McWilliams, Associated Students of Madison chair, endorsed Rep. Petri's Direct Loan Reward Act (H.R. 4370) in a letter published in the June 24 Wisconsin State Journal. (Please ignore the headline "Direct loans are a bad deal" which, oddly, is precisely the opposite of the point made by both letters.)

Under Petri's bipartisan proposal, schools using the Direct Loan program can receive half of the taxpayer savings these loans generate. The savings come from subsidies that would have gone to private lenders if the school had used the federal government's other loan program. Schools would use the new funds to boost Pell Grants for lower income students. Grants could increase by $2,000 per student each year.

"I've argued for years that subsidies for banks are not needed in our student loan programs," says Petri. "If Congress turns this money over to students, we can increase student aid at no additional cost to taxpayers. It's a win-win proposal."