Obama Fights to Make College More Affordable
Today, U.S. Senator Barack Obama (D-IL) made the following statement on The College Cost Reduction and Access Act, which passed the Senate this morning. The bill included a provision to increase Pell Grants for eligible students by $500 next year, and to $5,400 by 2012. The bill also mandates that interest rates on subsidized student loans are cut in half over four years. Senator Obama sat on the Conference Committee that won these improvements in the bill.
Below is a statement by Senator Obama:
"The first bill I introduced as a Senator was to make college more affordable for every American, and the bill we passed today is an important step toward achieving that goal," Senator Obama said. "In a global economy where countries who out-educate us will out-compete us tomorrow, we must make a college education available and affordable for every American, and that means doing more to invest in programs that work and expanding them to more students. We must also end wasteful, high-priced loans from private lenders and use the savings to help more students go to college. By investing in education we are restoring America's competitiveness in the world, and today is an important step forward. I want to thank Senator Kennedy for his continued leadership on this issue."
As a member of the Health, Education, Labor and Pensions Committee, Obama also worked to secure an increase of $100 million in college aid for Illinois students in 2008-2009, and a projected $850 million over the next several years. This increased student aid is mostly in the form of Pell Grants. This is paid for not by increasing the deficit, but by reductions in government subsidies to banks and other lenders. This is similar to the provisions of the HOPE Act, the first bill Senator Obama introduced in the Senate in 2005.
THE COLLEGE COST REDUCTION AND ACCESS ACT:
The College Cost Reduction and Access Act Will Provide Over $20 Billion in New Student Aid and Benefits - The Largest Increase in Funding Since the GI Bill. According to a recent report on education statistics, twenty years ago, the maximum Pell Grant covered 51 percent of the cost of tuition, fees, room and board at a public four-year college. In the 2005-2006 school year, the maximum Pell Grant covered roughly a third of these costs. Democrats have worked to rectify this decline in the purchasing power of the Pell Grant. Under the College Cost Reduction and Access Act, the maximum Pell Grant will be increased by $500 next year to $4800 and to $5,400 by 2012. [Analysis of Department of Education, NCES data; HR 2669, 2007; A New Commitment to Students and Families: Report by the U.S. Senate Committee on Health, Education, Labor, & Pensions, September 2007]
While Reducing the Interest Rate on Student Borrowers. The College Cost Reduction and Access Act reduces the interest rate on subsidized student loans, from 6.8 to 3.4 percent, making student loan repayment more manageable. [HR 2669, 2007]
The Measure Protects Borrowers By Making Repayment Terms Manageable. The College Cost Reduction and Access Act places a cap on monthly student loan payments at 15 percent of discretionary income, so that graduates with significant loan debt can better manage their payments. [HR 2669, 2007]
The College Cost Reduction and Access Act Provides Incentives for Students to Pursue Public Service Employment. The measure provides loan forgiveness if a student borrower spends at least ten years in a public service profession, including military service. In addition, the measure creates incentives for students to pursue careers as teachers by establishing TEACH grants. The grants would provide $4,000 per year for undergraduate students who commit to teaching in high-need school districts. [HR 2669, 2007; A New Commitment to Students and Families: Report by the U.S. Senate Committee on Health, Education, Labor, & Pensions, September 2007]
The College Cost Reduction and Access Act Reduces Subsidies to Lenders and Redirects the Fund to Students. The measure injects competition into the federal loan program and saves taxpayer dollars by including a pilot program that reduces the amount of federal subsidies to student loan lenders. [HR 2669, 2007; A New Commitment to Students and Families: Report by the U.S. Senate Committee on Health, Education, Labor, & Pensions, September 2007]
The College Cost Reduction and Access Act Invests In Minority-Serving Institutions. The measure invests $500 million in minority-serving higher education institutions so they can provide a quality education for students who may not otherwise earn a degree. [HR 2669, 2007]