The United States Senate passed the bipartisan Student Aid Reward Act last Thursday as an amendment to the 2006 fiscal year budget, increasing federal spending on direct student aid by $5.4 billion. The bill was introduced by Senators Edward Kennedy, D-Mass, and Gordon Smith, R-Ore., and Representatives Tom Petri, R-Wis. and George Miller, D-Calif. During a conference call with student newspapers the day the act was introduced, Kennedy called the amendment "a win for the students, a win for the colleges and a win for the taxpayers."

Direct loan programs are made with U.S. Treasury funds and are given directly to schools to support students' financial aid packages. Private loan programs are subsidized by the Federal Family Education Loan Program, through which schools receive aid from banks, credit unions and private institutions.

Peter Giumette, Brandeis' director of student financial services, said the University has used direct federal loans instead of privately-funded loans for the past four or five years. He said the University receives over $10 million in direct federal loans.

Giumette said the Student Aid Reward Act is preferable because it "allows us to go directly to a vendor for the federal government to provide loans." He said it is a more efficient program than the Federal Family Education Loan Program because it cuts out many of the middlemen in the loan process and features more customer service than private loan programs.

Petri said he objects to the federal government subsidizing financial aid from private institutions, saying the new program "eliminates a lot of waste with helping disadvantaged students across the country."

Kennedy said the less expensive and "more efficient," direct program will save the government $7 billion to $9 billion by decreasing the amount of subsidized funding to institutions.

Under the Student Aid Reward Act, schools receiving direct loans will be rewarded with an increase in Pell Grant aid. As a result, the maximum Pell Grant award per student will jump to about $4,500, up from $4,050. 430 Brandeis students are Pell Grant recipients.

Giumette said a school's choice between using direct federal loans over subsidized private loans is "a no-brainer." But, he said, smaller schools might opt for private loans because direct loans can create an administrative burden.

Giumette said private agencies have "a lot of political clout" in Washington and the lobby for subsidized loans soliciting universities has kept schools using the subsidized program.

In a statement released to colleges, Kennedy said, "Under current law, there are two parallel federal student loan programs that provide essentially the same loans and interest rates to students, but one costs billions of dollars more each year than the other.