WASHINGTON – On July 12, the House of Representatives passed the largest single investment in college financial aid in more than 60 years, which will help millions of students and families pay for college – at no cost to the American taxpayer.
The College Cost Reduction Act of 2007 (HR 2669) increases college aid by $18 billion over the next five years. This bill pays for itself by reducing the excessive federal subsidies being paid to the college loan industry. The House voted in favor of this legislation 273-149.
Among those voting to support the bill was Rep. Mike Thompson (D-CA).
"The best way to grow our economy and strengthen our middle class is by helping more people attend college," said Thompson. "Unfortunately, every year, about 200,000 American students hold off on going to college or skip it altogether because they can't afford it. Our country was built on the principle that everyone can better themselves, and I'm proud that we are taking this step to make higher education accessible to more Americans."
This legislation reduces the cost of college in three important ways:
First, the maximum value of the Pell Grant scholarship will increase by $500 over the next five years. About 6 million low- and moderate-income students would benefits from this increase.
Second, this legislation would cut student loan interest rates in half, which will benefit millions of borrowers. Like legislation passed by the House earlier this year, interest rates will be cut from 6.8 percent to 3.4 percent, saving the average borrower $4,400 over the life of the loan.
Third, this bill prevents 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.
"Tuition prices have skyrocketed for years, meaning more and more students and families are taking on increasing amounts of debt," added Thompson. "Their debt burden makes it extremely hard to fulfill dreams of homeownership, a family and retirement security. This bill will make it easier for millions of Americans to achieve the goal of a college education."
The College Cost Reduction Act includes a number of other provisions that will ease the financial burden imposed 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.
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