WASHINGTON, D.C. – Legislation that will make college dramatically more affordable for millions of Americans, at no new cost to taxpayers, was approved today by the House Education and Labor Committee by a bipartisan vote of 30 to 17. The full House of Representatives will vote on the bill next.
The legislation, the Student Aid and Fiscal Responsibility Act of 2009, will generate almost $100 billion in savings over the next ten years that will be used to boost Pell Grant scholarships, keep interest rates on federal loans affordable, create a more reliable and effective financial aid system for families, and enact President Obama’s key education priorities.
The legislation, the Student Aid and Fiscal Responsibility Act of 2009, will generate almost $100 billion in savings over the next ten years that will be used to boost Pell Grant scholarships, keep interest rates on federal loans affordable, create a more reliable and effective financial aid system for families, and enact President Obama’s key education priorities.
“Today’s vote is a vote to put students before banks and to finally ensure that our nation’s financial aid programs operate as intended – in the best interests of students, families and taxpayers,” said U.S. Rep. George Miller (D-CA), the Chairman of the Committee and the author of the bill. “This landmark legislation will help write the next great education legacy for our country. President Obama has rightly called for us to make historic investments to make college more affordable, to empower community colleges to help rebuild our economy, and to prepare our youngest learners to arrive at kindergarten ready to succeed. I hope this Congress will join our Committee in standing with him on the right side of history.”
“This bill goes a long way towards expanding the accessibility and affordability of a college education for students across America” said U.S. Rep. Rubén Hinojosa (D-TX), Chairman of the Subcommittee on Higher Education, Lifelong Learning, and Competitiveness. “The bill will streamline the financial aid application process and increase funding for Pell Grants and Minority Serving Institutions, while also helping lower our national deficit. This bill accomplishes something we can all be proud of.”
Similar to what President Obama proposed in his FY 2010 budget, the bill will originate all new federal student loans through the Direct Loan program starting in 2010, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to affordable college loans, at the same low interest rates, terms and conditions, no matter what happens in the economy.
The legislation will ensure that all federal student loan borrowers receive the best possible customer service when repaying their loans by forging a new public-private partnership that allows private lenders to compete for contracts to service loans. Additionally, it will ensure that non-profit lenders have the opportunity to continue servicing loans – preserving a role for lenders and maintaining jobs in communities throughout the country.
According to estimates from the Congressional Budget Office, the legislation will generate $87 billion in savings over the next 10 years. The legislation would invest those savings directly in students and families by:
To view a summary of the legislation, click here.
The House Education and Labor Committee has been examining various proposals for student loan reform and seeking feedback from all key stakeholders over the past few months. In May, the Committee held a hearing to examine these proposals, at which the Obama administration, lenders and colleges and universities testified. For more information on that hearing, click here.
“This bill goes a long way towards expanding the accessibility and affordability of a college education for students across America” said U.S. Rep. Rubén Hinojosa (D-TX), Chairman of the Subcommittee on Higher Education, Lifelong Learning, and Competitiveness. “The bill will streamline the financial aid application process and increase funding for Pell Grants and Minority Serving Institutions, while also helping lower our national deficit. This bill accomplishes something we can all be proud of.”
Similar to what President Obama proposed in his FY 2010 budget, the bill will originate all new federal student loans through the Direct Loan program starting in 2010, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to affordable college loans, at the same low interest rates, terms and conditions, no matter what happens in the economy.
The legislation will ensure that all federal student loan borrowers receive the best possible customer service when repaying their loans by forging a new public-private partnership that allows private lenders to compete for contracts to service loans. Additionally, it will ensure that non-profit lenders have the opportunity to continue servicing loans – preserving a role for lenders and maintaining jobs in communities throughout the country.
According to estimates from the Congressional Budget Office, the legislation will generate $87 billion in savings over the next 10 years. The legislation would invest those savings directly in students and families by:
- Investing $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2010, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percentage point;
- Investing $3 billion to bolster college access and completion support programs for students;
- Strengthening the Perkins Loan program, a campus-based program that provides low-cost federal loans to students;
- Keeping interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012;
- Making it easier for families to apply for financial aid by simplifying the FAFSA form;
- Providing loan forgiveness for members of the military who are called up to duty in the middle of the academic year; and
- Investing $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate.
To view a summary of the legislation, click here.
The House Education and Labor Committee has been examining various proposals for student loan reform and seeking feedback from all key stakeholders over the past few months. In May, the Committee held a hearing to examine these proposals, at which the Obama administration, lenders and colleges and universities testified. For more information on that hearing, click here.
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