Reforms increase Pell grants and give students relief from debt while ending wasteful subsidies to banks
 
As Maine’s high-school seniors and their families make their college choices this month, Congresswoman Chellie Pingree expressed her excitement that newly passed legislation to ease the burdens of student debt is starting to take effect.
 
“Right now, Maine families are crunching the numbers to see if they can afford to send their children to the colleges they worked so hard to get into,” said Pingree.  “Pell Grants and low-interest federal loans have always helped make this choice a little easier for working Maine families. But the reforms we just passed will make these programs even stronger, increasing aid to students and making sure they are not buried in debt when they graduate.”
 
The legislation converts all new federal student lending from private banks to the federal Direct Loan program, using the money currently spent on bank subsidies to directly support education and students. The conversion will save $61 billion over the next 10 years, with $10 billion of that going toward reducing the deficit.
 
“We always need to look for ways to make higher education more affordable for families,” said Pingree. “This legislation is a great step forward.  There’s no reason why we should be paying banks the money we could use to ease the burden on students and their families.”
 
The legislation—included the healthcare reforms package recently passed by Congress—does several things.

·     Increases scholarship awards. 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 by 2013, the scholarship will increase every year with the costs of living.

·     Lowers monthly loan payments. Starting in 2014, new borrowers who are eligible for income-based repayment will be able to cap their monthly loan payment at just 10 percent of their discretionary income—down from the current 15 percent.  

·     Quickens debt forgiveness by five years. Starting in 2014, borrowers who make their monthly payments will see their remaining balance forgiven after 20 years, reduced from the current 25 years.

·     Invests in education. Makes a $2 billion investment in a competitive grant program for community colleges to develop and improve educational or career-training programs. Also makes a $750 million investment in programs to improve college access, promote financial literacy, and increase graduation rates.