Kagen Votes to Cut Costs for Higher Education

Press Release

KAGEN VOTES TO CUT COSTS FOR HIGHER EDUCATION

Congressman Steve Kagen, M.D. cast his vote with a bipartisan House majority today to cut the cost of higher education, approving the single largest investment in higher education assistance since the GI Bill. And it comes at no added cost to the taxpayer.

The College Cost Reduction and Access Act makes higher education more affordable by cutting interest rates on student loans and increasing financial aid to students. The bill pays for itself by reducing taxpayer subsidies to the scandal-plagued private student loan industry. It actually cuts the federal deficit by three-quarters of a billion dollars.

The measure won overwhelming approval in both the House and Senate. The House approved the bill 292 to 97, while the Senate voted 79 to 12 to approve the bill. Bush Administration officials told congressional leaders Thursday that the president will sign the measure into law. Relief to debt-burdened families could begin as early as next month.

"This bill is very positive. It achieves the dual purpose of reducing the costs of student borrowing, and increasing grant eligibility. When you can achieve that, it is commendable," said UW-GB Director of Financial Aid Ron Ronnenberg.

"Nothing is more important than education, and families in Northeast Wisconsin will save money thanks to this bipartisan bill," said Congressman Steve Kagen.

"Nearly 76,000 students in Wisconsin take out college loans every year. Each one of them stands to save more than $4,000 in interest payments. And the nearly 68,000 Wisconsin students who receive Pell Grants will also benefit."

The College Cost Reduction and Access Act boosts college financial aid by more than $20 billion over the next five years and cuts interest rates on subsidized student loans in half over the next four years. The bill pays for itself by reducing federal subsidies to private student loan lenders by $20.9 billion.

The legislation reduces the cost of loans for millions of students by cutting interest rates in half on need-based student loans, from 6.8 percent to 3.4 percent over the next four years. The rate cut will save the typical student borrower a total of $4,400. About 75,905 students in Wisconsin take out need-based loans each year.
The legislation increases the maximum value of the Pell Grant scholarship by $1,090 over the next five years, reaching $5,400 by 2012. This will benefit 67,945 low- and moderate-income students in Wisconsin who receive Pell Grants.
In addition, the legislation caps loan repayments at 15% of the borrowers' yearly discretionary income to protect students from unmanageable levels of student debt. Borrowers in economic hardship can have loans forgiven after 25 years.

The College Cost Reduction and Access Act includes a number of other provisions that would ease the financial burden on students and families, including:

o Tuition assistance for excellent undergraduate students who agree to teach in the nation's public schools;
o Loan forgiveness after 10 years of public service and loan repayment for college graduates that go into vital public service jobs; and
o Strategies to help colleges contain costs and make online information on college costs for students and parents more user friendly.

President Franklin Roosevelt signed the GI Bill into law in 1944. The law enabled 7.8 million veterans of the Second World War to participate in education or job training programs.

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