Miller Announces Reforms to Student Loan Program to Make College More Affordable
WASHINGTON, D.C. -- On July 1st, reforms enacted under Democratic leadership in Congress in 2007 will go into effect to make college more affordable for students and student loans more manageable for recent graduates. The interest rate of need-based student loans will drop to a low 3.4 percent, fulfilling a Democratic promise of cutting the interest in half over four years. The average graduate of the class of 2012 will have saved $2,570 over the life of their loan.
“Tomorrow’s interest rate change is part of the commitment Democrats made to invest in education and invest in our students in this country,” said U.S. Rep. George Miller (D-CA). “We know that by making college more affordable, we’re giving the next generation the tools they need to work hard and make this country great. These are tough times for college students --college costs are increasing rapidly, especially in California. It isn’t any easier for recent graduates who are facing a very tough job market. But for students and graduates who want to go to college and have worked hard to get there, we should do everything we can to help support them. And that’s what the drop in interest rate means.”
Under the College Cost Reduction and Access Act, legislation written and championed by Miller, the Democratic Congress made historic investments in student aid at no new cost to taxpayers. The law halved interest rates on need-based federal student loans over four years – making these loans more affordable for low- and middle-income students. Additional reforms for student loan borrowers, passed under Democratic leadership, include:
- Historic Investments in the Pell Grant: The Pell Grant scholarship for the upcoming school year will remain at $5,550, thanks to investment and protections from Democrats in Congress. In the upcoming school year, 9.4 million students are expected to rely on the Pell Grant to help pay for college. (For a breakdown of district-by-district Pell Grant data, click here.)
- Income Based Repayment (IBR): Under IBR, borrowers are required to pay no more than 15 percent of any discretionary income (15 percent of what a borrower earns above 150 percent of the poverty level for their family size). After 25 years of lower payments, borrowers’ remaining loan balances, including interest, will be completely forgiven. Starting in 2014, new borrowers who are eligible for Income-Based Repayment will be able to cap their monthly loan payments at just 10 percent of their discretionary income. Borrowers who responsibly make their monthly payments will see their remaining balance forgiven after 20 years of repayment.
- Public Service Loan Forgiveness: This program provides loan forgiveness to college graduates who enter public service professions after ten years of public service and federal student loan repayments. Eligible public servants include firefighters, public defenders and prosecutors, first responders, law enforcement officers, early childhood educators and men and women serving in the military, and more.
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