Chairman Miller Introduces Legislation to Make Landmark Investments in College Affordability
WASHINGTON, D.C. – U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, today introduced legislation that will make college dramatically more affordable by investing billions of dollars in additional student aid – and at no new cost to taxpayers.
The legislation, the Student Aid and Fiscal Responsibility Act of 2009, will generate almost $100 billion in savings over the next ten years that will be used to boost Pell Grant scholarships, keep interest rates on federal loans affordable, create a more reliable and effective financial aid system for families, and enact President Obama’s key education priorities.
“As President Obama has made clear, we have a rare opportunity to make a landmark investment in America’s economic future by making common-sense changes to the way our student loan programs operate,” said Miller. “Students and families need stronger, reliable college aid, our economy needs a highly-skilled, educated workforce, and our taxpayers need policies that make the best use of their dollars. This legislation will help us reach all of these goals by transforming our financial aid system from one that puts banks before students into one that makes paying for college a better deal for families and taxpayers.”
Similar to what President Obama proposed in his FY 2010 budget, the bill will originate all new federal student loans through the Direct Loan program starting in 2010, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to affordable college loans, at the same low interest rates, terms and conditions, no matter what happens in the economy.
The legislation will ensure that all federal student loan borrowers receive the best possible customer service when repaying their loans by forging a new public-private partnership that allows private lenders to compete for contracts to service loans. Additionally, it will ensure that non-profit lenders have the opportunity to continue servicing loans – preserving a role for lenders and maintaining jobs in communities throughout the country.
According to estimates from the Congressional Budget Office, the legislation will generate $87 billion in savings over the next 10 years. The legislation would invest those savings directly in students and families by:
- Investing $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2010, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent;
- Investing $3 billion to bolster college access and completion support programs for student;
- Strengthening the Perkins Loan program, a campus-based program that provides low-cost federal loans to students;
- Keeping interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012;
- Making it easier for families to apply for financial aid by simplifying the FAFSA form;
- Investing $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate; and more.
In addition, the Student Aid and Fiscal Responsibility Act will direct $10 billion of these savings back to the U.S. Treasury to help pay down the deficit. It will also invest in early education opportunities and in school modernization projects that will help the nation transition to a clean energy economy.
To view a summary of the legislation, click here.
For more details on:
How this legislation will help students and families, click here.
For more details on converting to Direct Loans, click here.
For more details on how this bill will strengthen community colleges, click here.
For more details on investments in early education, click here.
To view a myth versus fact sheet on this legislation, click here.
To view the numerous and varied supporters of this legislation, click here.
The House Education and Labor Committee has been examining various proposals for student loan reform and seeking feedback from all key stakeholders over the past few months. In May, the Committee held a hearing to examine these proposals, at which the Obama administration, lenders and colleges and universities testified. For more information on that hearing, click here.
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