WASHINGTON, D.C. – Congressman Brian Higgins today voted to approve legislation that would make the single largest investment in college financial aid since the 1944 GI Bill, helping millions of students and families pay for college – and doing so at no new cost to U.S. taxpayers.
The College Cost Reduction Act of 2007, which passed the House by a vote of 273-149, would boost college financial aid by about $18 billion over the next five years. In New York State, loan and Pell aid to students and families would increase by $1,135,000,000 over the next five years. The legislation pays for itself by reducing excessive federal subsidies paid to lenders in the college loan industry, and it includes $750 million in federal budget deficit reduction.
“This legislation is a crucial investment in higher education and a remarkable step towards realizing the goal of making college affordable to every qualified student who wants to attend,” said Higgins.
Under the legislation, the maximum value of the Pell Grant scholarship would increase by $500 over the next five years. Combined with other Pell scholarship increases passed or proposed by Congress this year, the maximum Pell Grant would reach $4,900 in 2008 and $5,200 in 2011, up from $4,050 in 2006. About 6 million low- and moderate-income students nationwide would benefit from this increase, including 420,531 students from New York State.
The legislation would also provide debt relief to millions of students by cutting interest rates in half on need-based student loans. Like legislation passed by the House earlier this year, the College Cost Reduction Act would cut interest rates from 6.8 percent to 3.4 percent in equal steps over the next five years. Once fully phased-in, this would save the typical student borrower in New York State – with $14,276 in need-based student loan debt – $4,570 over the life of the loan. About 243,696 students attending 4 year public schools in New York State take out need-based loans each year.
Additionally, the legislation would also prevent student borrowers from facing unmanageable levels of federal student debt by guaranteeing that borrowers will never have to spend more than 15 percent of their yearly discretionary income on loan repayments and by allowing borrowers in economic hardship to have their loans forgiven after 20 years.
The College Cost Reduction Act includes a number of other provisions that would ease the financial burden put on students and families by the cost of college, including:
- Tuition assistance for excellent undergraduate students who agree to teach in the nation’s public schools;
- Loan forgiveness for college graduates that go into public service professions;
- Increased federal loan limits so that students won’t have to rely as heavily on costlier private loans;
- New tuition cost containment strategies; and
- Landmark investments in Historically Black Colleges and Universities, Hispanic Serving Institutions and minority serving institutions.