Washington, D.C. - Today, Congressman Joe Donnelly joined the House in passing the conference report to accompany H.R. 2669, The College Cost Reduction and Access Act. The bill and accompanying conference report, which was approved by the Senate on Thursday and passed the House by a vote of 292-97, now goes to the President’s desk for his signature.
“Getting a college education is essential to compete in today’s global economy,” Donnelly said. “By making the single largest investment in college financial aid since the 1944 GI Bill, this legislation helps millions of students and families pay for college, and does so at no new cost to taxpayers.”
The College Cost Reduction and Access Act increases the maximum Pell Grant scholarship by $490 next year and at least $1,090 over the next five years, ultimately reaching a maximum scholarship of at least $5,400 by 2012.This increase would fully restore the purchasing power of the scholarship, which in recent years had been frozen at $4,050 until Congress boosted its value to $4,310 earlier this year.
To reduce the cost of loans for millions of student borrowers, the legislation would cut interest rates in half on need-based student loans, from 6.8 percent to 3.4 percent over the next four years. H.R. 2669 cuts the interest rate in half in five steps: from 6.8 percent to 6.12 percent in 2007; 5.44 percent in 2008; 4.76 percent in 2009; 4.08 percent in 2010; and 3.4 percent in 2011.
Once fully phased-in, this would save the typical Hoosier student loan borrower at four-year public schools – with $12,967 in need-based student loan debt – $4,140 over the life of the loan. Approximately 94,267 Hoosier students at four-year public schools take out need-based loans each year.
In addition, the legislation would 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 25 years.
The bill pays for itself by reducing excessive federal subsidies paid to lenders in the college loan industry by $20.9 billion. It also includes $750 million in federal budget deficit reduction.
“I’m pleased that we were able to find offsets to pay for this legislation,” Donnelly said. “It’s important that we give our kids an opportunity to get a college education at an affordable price, but it’s also important that we not pass on our debt to our children and grandchildren.”
The College Cost Reduction and Access Act also includes a number of other provisions that would ease the financial burden imposed on students and families by the cost of college, including:
o Tuition assistance for excellent undergraduate students who agree to teach in the nation’s public schools;
o Loan forgiveness after 10 years of public service and loan repayment for college graduates that go into vital public service jobs;
o Landmark investments in Historically Black Colleges and Universities, Hispanic Serving Institutions and other minority serving institutions; and
o Strategies to help colleges contain costs and make online information on college costs for students and parents more user friendly.
President Franklin Roosevelt signed the GI Bill into law in 1944. The original law enabled 7.8 million veterans of World War II to participate in education or job training programs.
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