Washington-- U.S. Senator Evan Bayh today voted to increase financial aid for college students by more than $20 billion and to halve interest rates on student loans as both the House and Senate today approved final passage of legislation that will put the dream of a college degree within reach of more Americans.

The College Cost Reduction and Access Act of 2007 cuts the interest rate on subsidized student loans from 6.8 to 3.4 percent and raises the maximum Pell Grant amount by nearly $500 next year to $4,800 per eligible student—and to $5,400 per eligible student by 2012. The bill now moves to President Bush’s desk for his signature.

For Indiana, the bill means Hoosier students will be eligible for an additional $49 million in Pell Grant aid next year and nearly $532 million over the next five years. It is estimated that this will increase the average Pell Grant in Indiana by $350 next year to $2,780.

“A college education is a necessity, not a luxury, for young people who strive to succeed in today’s competitive global economy,” Senator Bayh said. “The cost of a college degree has tripled in the last 20 years, and today I was proud to vote for the largest increase in student aid funding since the G.I. Bill. The steps taken today by Congress will help ensure that students who work hard, sacrifice and make the grade will have the chance to earn a college degree.”

The legislation also provides incentives in the form of loan forgiveness for those who are willing to commit to public service careers. Specifically, a student borrower who works at least 10 years in a public service profession, including military and nonprofit organizations, will have their loans forgiven. It also creates new TEACH Grant scholarships of $4,000 per year for students who commit to teaching in a high-need school district.

The bill also protects borrowers by capping monthly loan payments at 15 percent of discretionary income, easing excessive loan burdens. For example, a social worker in Indiana earning $30,910, with an average student loan debt of $19,518 would have monthly payments reduced by $95 (from $225 to $130), a reduction of 42 percent.

Senator Bayh has been a leader in the effort to make college more affordable. In May, he introduced the Universal Higher Education and Lifetime Learning Act to strengthen and simplify the three existing tax breaks students currently use to help pay for higher education. In July, he introduced the Interest Relief Act, which would suspend the accrual of interest on federal student loans for active duty soldiers and their spouses. In 1990, then-Governor Bayh created the 21st Century Scholars program, which has helped thousands of disadvantaged students achieve the dream of a college degree.

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