The House and Senate have overwhelmingly approved legislation to address one of the top six priorities of the Democratic Congress – providing financial relief to low- and moderate-income college students.  The College Cost Reduction and Access Act, H.R. 2669, makes significant changes to the student loan programs.  It will boost college financial aid by approximately $20 billion over the next five years, paid for by reducing excessive federal subsidies to lenders in the college loan industry.
Under the legislation, the maximum value of a Pell Grant scholarship will increase by $1,090 over the next five years, reaching $5,400 by 2012.  In FY 2006, of the more than five million students who received a Pell Grant, 74 percent had family incomes below $30,000.  The bill will also cut interest rates in half, from 6.8 percent to 3.4 percent over 5 years, for the 6.8 million students who take out need-based student loans each year.  Once fully implemented, the typical borrower with a $13,800 loan debt would save $4,400 over the life of the loan.

H.R. 2669 invests $510 million for support services to help recruit and retain students in institutions that historically have served Black and Hispanic students.  The bill provides up-front tuition assistance of $4,000 per year to at least 21,500 students who pursue careers as public school teachers who commit to teaching high-need subjects in high-need schools for four years.  The bill includes an important assist to workers in public service professions, providing complete loan forgiveness after 10 years of service for college graduates working in nursing, social work, early childhood education, teaching, law enforcement, firefighting, the military and others.  HR 2669 also guarantees that borrowers will never have to spend more than 15 percent of their yearly discretionary income on loan repayments and allows borrowers in economic hardship to have their loans forgiven after 25 years.

The President is expected to sign the bill into law.

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