THE LARGEST INVESTMENT IN EDUCATION SINCE THE GI BILL

There are certain milestones in ones life that can be looked upon as significant events. In my case, the passing of the reconciliation bill that included the Student Aid and Fiscal Responsibility Act (SAFRA) is one of those significant events.

From the time I came to Congress, my primary goal was to help make college more affordable for all students. Now we have a law in place that is the single largest investment in college aid in history. This is a bigger investment than the GI Bill which helped so many people receive a college education after WWII.

As Chairman of the Subcommittee on Higher Education, Lifelong Learning and Competitiveness, I am very proud of this landmark bill.

It will change the way the student loan system functions by originating all new loans through the government’s Direct Loan program, but will maintain competition among private lenders and non-profits to provide top-notch customer service for student borrowers and save American jobs. By reforming the federal student loan system, taxpayers will save $68 billion over 11 years while expanding access to an affordable college education to more American students.

Students and families can now borrow more affordably and apply for larger Pell Grants. This law will strengthen our community colleges and minority-serving institutions, and help ensure that we have the most highly skilled, and effective workforce in the world.

Here is just some of what the bill will do:

• Make college more affordable for millions of students by investing a total of $36 billion into the Pell Grant program over 10 years, including $22.6 billion to increase the maximum Pell Grant award to keep up with inflation. The bill increases the maximum award from $5,550 next year to nearly $6,000 over the years ahead. In the 2008-2009 year, 6.2 million Americans relied on Pell Grants to help pay for college and career training; eighty-nine percent of those students came from families making less than $40,000 per year.

• Protect students’ Pell Grant scholarships from the upcoming budget shortfall. The provisions will direct $13.5 billion of the $36 billion Pell Grant investment to address most of the gap needed to ensure there is not a dramatic cut in Pell grant funding in 2011. Because the Pell Grant program will be faced with increased costs due to higher demand, the maximum award could decrease to $2,150 from its current value of $5,350. If this is not addressed, students could see a decrease in aid of almost 60 percent and nearly 600,000 students could lose the benefit entirely.

• Keeps jobs in America. Rather than force private industry out of the system, lenders will compete for contracts to service all federal student loans, which will guarantee borrowers high-quality customer service and preserve jobs. Unlike loans made by banks, Direct Loans can only be serviced by workers in the U.S. Last year, Sallie Mae brought 2,000 jobs back to U.S. soil to win a direct loan servicing contract. Sallie Mae is now one of four private banks servicing 4.4 million direct loans.

• Invest $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions. This bill recognizes the important role that minority-serving institutions like the University of Texas Pan-American play in educating our country’s low-income and minority. The funds will allow these critical institutions to recruit and graduate minority students, particularly in the fields of math, science, engineering and technology, that our nation needs to remain competitive.

• Make federal student loans more manageable to repay by strengthening an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at just 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.

• Give students the support they need to stay in school and graduate. The provisions invest $750 million in the College Access Challenge Grant (CACG) program. These formula grants to states help organizations provide services that increase the number of low-income students who are prepared to enter and succeed in college and manage their student loans, such as financial literacy and debt management skills.

• Prepare students and workers for competitive jobs by investing $2 billion in a competitive grant program for community colleges like South Texas College, Texas State Technical College and Coastal Bend College to develop and improve educational or career training programs.