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Today the U.S. Senate and House of Representatives passed the College Cost Reduction and Access Act by votes of 79 to 12 and 292 to 97 respectively. The bill now goes to the president who has said he will sign the legislation into law.
Statement by U.S. PIRG Higher Education Advocate Luke Swarthout:
“The College Cost Reduction and Access Act is the most meaningful higher education reform in more than 15 years. The legislation addresses the dual financial challenges of access and affordability that face American college students. The legislation provides billions of dollars a year in additional grant aid to low-income students through the Pell Grant program. It will also help students address the burden of rising student debt through lower interest rates and a new repayment system.
This legislation is an example of Congress getting policy making right. The bill trims excessive subsidies that benefit a handful of banks and directs them to millions of students and families who are working to pay for college. The bipartisan votes for this legislation, and the president’s pledge to sign it into law, are testament to the broad support for helping students and families pay for college.”
The College Cost Reduction and Access Act will:
- Increase the maximum Pell Grant award by $490 for each of the next two school years, by $690 for the following two school years and by $1,090 for each following year. The Pell Grant is the nation’s premier college access program, providing grants to 5 million low-income students each year. The maximum Pell Grant is currently $4,310.
- Create an Income Based Repayment program that allows borrowers to repay their loans as percentage of their income. Borrowers would be expected to pay 15 percent of any income above 150 percent of the poverty line (about $15,000 for a single individual). This new program will protect borrowers with low salaries having to make unmanageable payments. As a result students will be able to make employment and life decisions based on their values rather than the volume of their debt.
- Reduce interest rates on student loans for more than 5 million low and middle-income student borrowers receiving subsidized Stafford loans. To see how many students would benefit from these interest rate reductions read U.S. PIRG’s report, “Cutting Interest Rates, Lowering Student Debt.” (Note: this report does not describe the interest rate reduction used in the final College Cost Reduction Act)
- Finance increased education spending by reducing subsidies to student lenders. Lenders will receive a reduced rate of return for offering federal student loans and a slightly reduced reinsurance rate from the federal government. As a result, the increased grant aid and loan benefits will have no additional cost to taxpayers.
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