Rep. Tom Allen Votes to Increase Pell Grants, Cut an Average of $4,400 in Education Loan Debt for More Than 21,000 Maine Students

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Rep. Tom Allen Votes to Increase Pell Grants, Cut an Average of $4,400 in Education Loan Debt for More Than 21,000 Maine Students

-U. S. Representative Tom Allen today hailed House passage of H.R. 2669, The College Cost Reduction Act of 2007, legislation to increase college financial aid to students by $18 billion over five years while actually reducing the federal budget deficit by nearly $1 billion. The legislation achieves these twin objectives by reducing excessive federal subsidies paid to lenders in the college loan industry by $19 billion.

"This is the largest single increase in federal student aid since 1944 when Congress passed the GI Bill, which enabled millions of returning World War II veterans to go to college and ushered in one of the greatest eras of prosperity in American history," Representative Allen said. "This bill makes up to $500 in additional Pell Grants available and would reduce the average four-year education loan debt by $4,400 for more than 21,000 Maine students . Like the GI Bill, the College Cost Reduction Act will open the gateway to a college education and the opportunities that creates for millions of Americans while providing much-needed relief from education loan debt to students and their families."

H.R. 2669 cuts interest rates on need-based student loans 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. More than 21,000 Maine students and 6.8 million nationwide take out such need-based loans each year.

"This legislation also guarantees that students will never have to spend more than 15 percent of their yearly discretionary income on loan repayments, protecting them from unmanageable student debt levels that force them to postpone or forego the dream of purchasing their first home," Representative Allen said. "It allows borrowers with economic hardship to have their loans forgiven after 20 years. It restores the promise of a college education that has slipped away from working families in recent years as the Bush Administration and Republican congressional majorities failed to respond to skyrocketing education costs."

Representative Allen noted a number of additional provisions in the bill to ease the financial burden imposed on students and families by the cost of college, including:

o Tuition assistance for excellent undergraduate students who agree to teach in the nation's public schools;

o Loan forgiveness for college graduates who go into public service professions;

o Increased federal loan limits so that students won't have to rely as heavily on costlier private loans; and

o New tuition cost containment strategies.

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