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Congressman Higgins Votes to Pass Landmark Student Loan Reforms

Mar 22, 2010
Press Release

Congressman Brian Higgins (NY-27) voted with his colleagues in the House of Representatives to approve historical reforms to federal student loan programs that will utilize taxpayer savings and expand college aid while reducing the federal deficit.

"Developing a strong, competitive economy starts with making key changes to the affordability and accessibility of education," said Congressman Higgins.  "I applaud these reforms that ease financial burdens of our students— creating more economic opportunities for our future workforce and enabling the fulfillment of many dreams to achieve a higher education.”

This legislation builds upon the principles of the Student Aid and Fiscal Responsibility Act, which the House of Representatives passed in September with bi-partisan support, to create savings that make college more affordable for students, families, and the economy.

Elimination of Wasteful Spending, $10 Billion Deficit Reduction
Starting July 1, 2010, this legislation calls for the utilization of the more dependable and cost-efficient Direct Loan program, which currently serves millions of students.  This transition eliminates wasteful subsidies and creates a stronger and more reliable student loan system with borrowers and the Department of Education working directly together.  

Over the next decade, this systematic change saves taxpayers $61 billion and reduces the deficit by at least $10 billion, accordingly to the nonpartisan Congressional Budget Office.  Furthermore, the reforms preserve jobs in America by maintaining a role specifically for U.S. lenders in which they compete for contracts that will allow them to provide support services to borrowers such as loan repayment guidance, financial literacy and loan default prevention.

Historical Investment of $36 billion in Pell Grant Scholarships
This legislation delivers an unprecedented and fully paid for investment of $36 billion over 10 years to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and $5,975 by 2017.  This translates to an investment of $67 million in Congressman Higgins’ district and $698 million in the state of New York.  Starting in 2013, the scholarship will be increase with costs of living, which includes energy, food, and other consumer good prices, by linking it to the Consumer Price Index.

Budget shortfalls and an increased demand for higher education have put great financial strain on the Pell Grant program making this investment imperative for the student population and their families.  The Department of Education estimates that, without this investment, as many as 8 million students nationally could have their Pell Grant Awards cut by 60 percent from $5,350 to $2,150 and 600,000 students could lose their benefits entirely.  In the 2010-2011 academic year, 18,146 students in Congressman Higgins' district will be eligible for a Pell Grant Award.

Other significant investments include:
 

  • $750 million to bolster college access and complete support resulting in $38 million in New York over the next 5 years for students
    • To increase funding for the College Access Challenge Grant program, and to fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
  • $1.5 billion to strengthen Income-Based Repayment program
    • To make federal loans more affordable by allowing borrowers to lower monthly cap of federal loan repayments from 15 percent of discretionary income to just 10 percent for new borrowers after 2014 and forgiving loans after 20 years.
  • $2 billion in a competitive grant program for community colleges
    • To develop and improve educational or career training programs that potentially benefit the 270,000 students enrolled in community colleges in New York State.
       

The legislation is supported by a diverse coalition of the nation’s leading student organizations and education groups. For a full list of supporters, click here: https://edlabor.house.gov/blog/2009/07/supporters-of-the-student-aid.shtml.

The legislation now heads to the Senate as part of the reconciliation bill that carries the improvements to comprehensive health insurance reform.

In 2007, Congressman Higgins supported and the 110th Congress passed the College Cost Reduction and Access Act, which set aside an additional $20 billion in federal student aid without any new costs to taxpayers-the largest investment in student financial aid since the G.I. Bill in 1944.  For more information on the new benefits visit the Department of Education and Federal Student Aid website at https://studentaid.ed.gov/.

New education benefits are also available to veterans through the GI Bill for the 21st Century approved by the House on June 19, 2008.  Service members may receive benefits for education pursued on or after August 1, 2009.  Benefits are generally effective for up to 15 years following the release of active duty.  The benefits are disbursed on a sliding scale based on time served.  For details on the new GI Bill or to apply for a certificate of eligibility visit the Department of Veterans Affairs website at www.gibill.va.gov.