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College Act passed by Congress
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On Sept. 7, the U.S. Senate and House of Representatives passed the College Cost Reduction Act in Washington, D.C.
The act will help lower student loan debt by lowering subsidies to private banks at no additional cost to taxpayers.
The bill is awaiting a signature from the president.
It will increase the maximum Pell Grant and allow low-income students to qualify for the maximum award.
The Pell Grant, which is the nation’s leading college access program, provides grants to five million low-income students a year. Currently, the maximum is $4,310.
According to the legislation, the maximum Pell Grant will increase to $7,600 for academic year 2008-2009 and eventually will stand at $11,600 for the academic
year 2012-2013.
For undergraduate students borrowing from the Federal Family Education Loan and Direct Loan programs, such as the Stafford Loan, interest rates will reduce from 6.8 percent in July 2006 to 3.4 percent in July 2012.
Out of the five million low and middle-income student borrowers in the U.S. that qualify, 2,600 are from Idaho.
“[The bill] acknowledges that students have been paying too much in loans,” Higher Education Advocate for U.S. PIRG Luke Swarthout said.
Lenders will receive a lower rate of return for federal student loans and a slightly smaller reinsurance rate from the federal government.
Therefore, taxpayers are not paying extra for the increased grant aid and loan benefits.
According to Swarthout, private banks and other companies have over-billed the Department of Education with the “we could do it” attitude.
“The banks have taken money out to amuse themselves,”
Swarthout said.
The bill also provides a student loan forgiveness program aimed at graduates in poorly paid areas such as teachers, librarians, nurses and child welfare workers.
According to the Department of Education, the average student graduates with $19,000 of debt.
In addition to the increased Pell Grant and lower interest rates, colleges are required to report explanations on increased.
This places schools on “affordability alert status” if their prices continue to go over the acceptable amount established by the bill, according to the legislation. It controls tuition costs.
“[The bill] provides quality student aid for students,” Swarthout said.
JESSICA HENDERSON
News Writer