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Senator Klobuchar Votes in Support of College Cost Reduction Act

Makes college more affordable for students through increased grants and lower interest rates

September 7, 2007

Washington, D.C. – Today, Senator Amy Klobuchar (D-MN) cast her vote in favor of the Higher Education Act, slashing student interest rates in half and increasing the Pell Grant program.  The College Cost Reduction Act, S. 2996, sponsored by Senators Edward Kennedy (D-MA) and Mike Enzi (R-WY), will provide more than $20 billion to help students and families pay for college. In addition to increasing access to higher education for Americans, the legislation aims to improve our K-12 schools by promoting effective teacher preparation programs.

“Today’s passage of the Higher Education Act is a victory for all Americans, providing important resources to expand educational opportunities for millions of hardworking, determined students.  We must ensure the next generation of American leaders has the necessary preparation to succeed in a global world,” said Klobuchar.

The cost of college has nearly tripled in the past 20 years, but federal financial aid has not kept up. Today’s bill will make college more affordable by:

• Increasing access for low-income students by raising the maximum Pell Grant to $5,100 and $5,400 by 2012 and implementing the Promise Grant program.

• Protecting borrowers by capping monthly loan payments at 15% of discretionary income.

• Interest Rates – student loan interest rates for subsidized Stafford Loans (for undergrads) will be cut nearly in half to 3.4% by 2011.

• Encouraging public service by providing loan forgiveness for public service employees who continue in public service for 10 years– including employees of non-profit organizations.

In addition, reforms will be made to the student loan system, through protecting students and cleaning up the student loan industry so it works to benefit students, not lenders.

This year, nearly 80,000 Minnesotans received Pell Grants, at a maximum of $4,310, next year they will be able to receive $5,100 by the 2008-2009 year and $5,400 by 2012-2013 year.

What the Bill means for Minnesota:
• In 2007, Minnesota received 185.5 million in Pell Grant dollars.
• Under the bill, Minnesota will receive an additional 26.8 million in need-based grant aid next year.
• Over the next 5 years, MN will receive 291.8 million in additional need-based grant aide.
• These numbers will increase the average grant in Minnesota by $350 in 2008 to $2,790.

What the bill does for Minnesotans:
• A social worker with one child in Minnesota earning $47,880, with average student loan debt of $20,560, would have his or her monthly payments reduced by $28, from $237 to $209. This is a reduction of 12%
• Under this bill, a starting teacher in Minnesota earning $31,632 with the state average loan debt of $20,560 could have loan payments capped at 15% - reducing their monthly payments by $69, from $237 to $168, a reduction of 29%. After 10 years of teaching, all remaining debt would be forgiven – in this case, a benefit worth $11,729.

“The costs of higher education are soaring, blocking many qualified students from attending college and forcing many others to end their education prematurely.  Student loan debt has become a crippling financial burden for students, both during and after their studies. The College Cost Reduction Act will provide significant help directly to students and their families,” said Klobuchar.

In addition to supporting today’s bill, Senator Klobuchar is a sponsor of the Middle Class Opportunity Act, which aims to expand access to college by consolidating three major tax deductions and credits into a single $2,500 annual credit to cover tuition, fees and textbooks.

The College Cost Reduction Act increases access to higher education through a reallocation of federal education money and a reauthorization of programs under the Higher Education Act of 1965. Congress first passed the Higher Education Act more than 40 years ago, guided by the principle that no qualified student should be denied the opportunity to attend college because of the cost. The amendments to the reauthorization of the Higher Education Act not only ensures that all qualified students have the opportunity for higher education but it also holds colleges accountable for rising tuition costs by creating a nationwide watch list, simplifies the financial aid process by reforming the Free Application for Federal Student Aid (FAFSA) and makes certain that lenders and colleges follow high ethical standards.

The bill passed the Senate today by a vote of 79 to 12 and the House is expected to vote on the same legislation later today. If the House passes the bill, it then moves to the President’s desk for approval.

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