College Cost Reduction Act of 2007

Press Release

Congresswoman Brown voted today to approve legislation that would make the single largest investment in college financial aid since the 1944 GI Bill, helping millions of students and families pay for college.

The legislation, the College Cost Reduction Act of 2007 (H.R. 2669), which passed the House today, would boost college financial aid by approximately $18 billion over the next five years. The funding would come from a reduction in federal subsidies paid to lenders in the college loan industry by $19 billion. It also includes nearly $1 billion in federal budget deficit reduction. The Senate is expected to vote on similar legislation this month.

"I am thrilled to see that the maximum value of the Pell Grant scholarship would increase by $500 over the next five years if this legislation is singed into law. When this is combined with other Pell scholarship increases passed or proposed by Congress this year, the maximum Pell Grant has the potential to reach $4,900 in 2008 and $5,200 in 2011. About 6 million low- and moderate-income students would benefit from this increase," said the Congresswoman. The Congresswoman continued, "I am also pleased to see that the Pell Grant eligibility requirements were loosened, since the bill raises the income threshold below which families automatically qualify for such grants, to $30,000 from $20,000."

In essence, the legislation would cut interest rates in half on need-based student loans, reducing the cost of those loans for millions of student borrowers. Like legislation passed by the House earlier this year, the College Cost Reduction Act would cut interest rates from 6.8 percent to 3.4 percent in equal steps over the next five years. Once fully phased-in, this would save the typical student borrower - with $13,800 in need-based student loan debt - $4,400 over the life of the loan. About 6.8 million students take out need-based loans each year. For the more than 125,000 students in Florida who take out need based loans at public schools, these students should see approximately $4300 in interest rate cut savings over the life of the loan.

Source