Obama Thanks Kildee for His Work on the Student Aid and Fiscal Responsibility Act

WASHINGTON, DC---Today, as President Barack Obama signed into law the Student Aid and Fiscal Responsibility Act, he thanked Congressman Dale E. Kildee (D-MI) for his long record of working to make college more affordable for all Americans.  The president also spoke with Congressman Kildee via telephone yesterday to express his gratitude.

Kildee said the new law will help us reach the goal of producing the highest increase ever in the number of students attending college.  By bypassing the banks this will be the single largest investment in higher education—without any cost to the American taxpayer. 

Specifically, these provisions will:

• Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through the federally-guaranteed student loan program. The Direct Loan program is a more reliable lender for students and more cost-effective for taxpayers.  This provision saves taxpayers $61 billion over the 10 years by switching to the cheaper Direct Loan program, according to the Congressional Budget Office. In addition to investing in college aid, these provisions will also reduce the deficit by at least $10 billion over 10 years.
• Invests $36 billion over 10 years to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $5,975 by 2017. Starting in 2013, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index. This includes an investment of $13.5 billion to fund a shortfall in the Pell Grant scholarship program due to increased demand for the scholarship.
• Invests $750 million to bolster college access and completion support for students. It will increase funding for the College Access Challenge Grant program, and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
• Makes federal loans more affordable for borrowers to repay by investing $1.5 billion to strengthen an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.
• Invests $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs.

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