03.18.10
“Well, the Democratic leadership in Congress has made its decision -- we’re going to help students and their families,” Miller said.
“This is good for students, taxpayers, and American jobs,” Miller added. “With one move, Congress can make college more affordable, keep jobs in America, prepare young people for our global economy, and reduce our deficit by billions.”
Miller worked closely on this legislation with Sen. Tom Harkin (D-IA), who unveiled the provisions in the Senate today.
“Education is the key to success in this country. It has the ability to transform a young person’s life and give them opportunities above and beyond the generations before them. But as millions of Americans struggle to afford the costs of higher education, multi-billion-dollar, taxpayer financed subsidies continue to flow to private banks,” said Harkin. “As Americans tighten their belts and make smart choices with their money, Congress should too. Our bill redirects that funding to students and families, making college more affordable and ensuring that more Americans have access to higher education and the skills to succeed in the 21st Century economy.”
Consistent with what President Obama first proposed last year, this legislation would eliminate wasteful subsidies to banks in the federal student loan programs, and instead originate all federal student loans directly through the government.
According to the Congressional Budget Office, this change would generate $61 billion in savings over 10 years that will be used to boost Pell Grant scholarships, make student loans more manageable for borrowers to repay, and strengthen community colleges.
Private lenders and banks would still have a role in servicing all federal student loans, which would guarantee borrowers high-quality customer services, maintain jobs in the private sector, and even protect jobs from being shipped overseas. Direct government loans, unlike loans made by banks, must be serviced by U.S. workers.
The federal government already funds 88 percent of all federal student loan volume, between loans that are already lent to students directly through the government and an emergency aid program student lenders have relied on since the credit crisis in 2008.
The budget resolution passed by the House and Senate budget committees last year instructed Congress to use reconciliation to enact both health insurance and student loan reforms that reduced the deficit by $1 billion over five years. The reconciliation measure today meets those requirements – it is fully paid for and reduces the deficit by at least $10 billion over 10 years.
Specifically these provisions will:
• Make college more affordable for millions of students by investing a total of $36 billion into the Pell Grant program over 10 years, including $22.6 billion to increase the maximum Pell Grant award to keep up with inflation. The bill increases the maximum award from $5,550 next year to nearly $6,000 over the years ahead. In the 2008-2009 year, 6.2 million Americans relied on Pell Grants to help pay for college and career training; eighty-nine percent of those students came from families making less than $40,000 per year.
• Protect students’ Pell Grant scholarships from the upcoming budget shortfall. The provisions will direct $13.5 billion of the $36 billion Pell Grant investment to address most of the gap needed to ensure there is not a dramatic cut in Pell grant funding in 2011. Because the Pell Grant program will be faced with increased costs due to higher demand, the maximum award could decrease to $2,150 from its current value of $5,350. If this is not addressed, students could see a decrease in aid of almost 60 percent and nearly 600,000 students could lose the benefit entirely.
• Keeps jobs in America. Rather than force private industry out of the system, lenders will compete for contracts to service all federal student loans, which will guarantee borrowers high-quality customer service and preserve jobs. Unlike loans made by banks, Direct Loans can only be serviced by workers in the U.S. Last year, Sallie Mae brought 2,000 jobs back to U.S. soil to win a direct loan servicing contract. Sallie Mae is now one of four private banks servicing 4.4 million direct loans.
• Invest $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions. This bill recognizes the important role that minority-serving institutions play in educating our country’s low-income and minority students by continuing the funding provided in the 2007 education reconciliation bill for Historically Black Colleges and Universities, Hispanic-serving Institutions, Tribal Colleges and Universities and other MSIs.
• Make federal student loans more manageable to repay by strengthening an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at just 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.
• Give students the support they need to stay in school and graduate. The provisions invest $750 million in the College Access Challenge Grant (CACG) program. These formula grants to states help organizations provide services that increase the number of low-income students who are prepared to enter and succeed in college and manage their student loans, such as financial literacy and debt management skills.
• Prepare students and workers for competitive jobs by investing $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs.
Additional Information:
Myth/Fact document on student loan reform
Fact Sheet on student loan reform
Miller: Health Care Bill Will Include Student Loan Reform and Deficit Reduction Legislation
WASHINGTON, D.C. – A landmark measure to make college more affordable and create jobs that stay in the U.S. at no cost to taxpayers will be included in the historic health care legislation scheduled for an upcoming vote in Congress, U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, announced today. The measure represents the single largest investment in federal student aid in history, and includes many of President Obama’s key education initiatives. “This legislation offers the most sweeping changes to the federal student loan program in a generation,” said Miller, who unveiled the details of the package this morning. “This is really about making a simple choice. Congress can either continue the longstanding boondoggle that rewards banks with tens of billions of dollars in subsidies at the expense of families and taxpayers – or we can invest that money directly in students and America’s world economic leadership.“Well, the Democratic leadership in Congress has made its decision -- we’re going to help students and their families,” Miller said.
“This is good for students, taxpayers, and American jobs,” Miller added. “With one move, Congress can make college more affordable, keep jobs in America, prepare young people for our global economy, and reduce our deficit by billions.”
Miller worked closely on this legislation with Sen. Tom Harkin (D-IA), who unveiled the provisions in the Senate today.
“Education is the key to success in this country. It has the ability to transform a young person’s life and give them opportunities above and beyond the generations before them. But as millions of Americans struggle to afford the costs of higher education, multi-billion-dollar, taxpayer financed subsidies continue to flow to private banks,” said Harkin. “As Americans tighten their belts and make smart choices with their money, Congress should too. Our bill redirects that funding to students and families, making college more affordable and ensuring that more Americans have access to higher education and the skills to succeed in the 21st Century economy.”
Consistent with what President Obama first proposed last year, this legislation would eliminate wasteful subsidies to banks in the federal student loan programs, and instead originate all federal student loans directly through the government.
According to the Congressional Budget Office, this change would generate $61 billion in savings over 10 years that will be used to boost Pell Grant scholarships, make student loans more manageable for borrowers to repay, and strengthen community colleges.
Private lenders and banks would still have a role in servicing all federal student loans, which would guarantee borrowers high-quality customer services, maintain jobs in the private sector, and even protect jobs from being shipped overseas. Direct government loans, unlike loans made by banks, must be serviced by U.S. workers.
The federal government already funds 88 percent of all federal student loan volume, between loans that are already lent to students directly through the government and an emergency aid program student lenders have relied on since the credit crisis in 2008.
The budget resolution passed by the House and Senate budget committees last year instructed Congress to use reconciliation to enact both health insurance and student loan reforms that reduced the deficit by $1 billion over five years. The reconciliation measure today meets those requirements – it is fully paid for and reduces the deficit by at least $10 billion over 10 years.
Specifically these provisions will:
• Make college more affordable for millions of students by investing a total of $36 billion into the Pell Grant program over 10 years, including $22.6 billion to increase the maximum Pell Grant award to keep up with inflation. The bill increases the maximum award from $5,550 next year to nearly $6,000 over the years ahead. In the 2008-2009 year, 6.2 million Americans relied on Pell Grants to help pay for college and career training; eighty-nine percent of those students came from families making less than $40,000 per year.
• Protect students’ Pell Grant scholarships from the upcoming budget shortfall. The provisions will direct $13.5 billion of the $36 billion Pell Grant investment to address most of the gap needed to ensure there is not a dramatic cut in Pell grant funding in 2011. Because the Pell Grant program will be faced with increased costs due to higher demand, the maximum award could decrease to $2,150 from its current value of $5,350. If this is not addressed, students could see a decrease in aid of almost 60 percent and nearly 600,000 students could lose the benefit entirely.
• Keeps jobs in America. Rather than force private industry out of the system, lenders will compete for contracts to service all federal student loans, which will guarantee borrowers high-quality customer service and preserve jobs. Unlike loans made by banks, Direct Loans can only be serviced by workers in the U.S. Last year, Sallie Mae brought 2,000 jobs back to U.S. soil to win a direct loan servicing contract. Sallie Mae is now one of four private banks servicing 4.4 million direct loans.
• Invest $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions. This bill recognizes the important role that minority-serving institutions play in educating our country’s low-income and minority students by continuing the funding provided in the 2007 education reconciliation bill for Historically Black Colleges and Universities, Hispanic-serving Institutions, Tribal Colleges and Universities and other MSIs.
• Make federal student loans more manageable to repay by strengthening an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at just 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014.
• Give students the support they need to stay in school and graduate. The provisions invest $750 million in the College Access Challenge Grant (CACG) program. These formula grants to states help organizations provide services that increase the number of low-income students who are prepared to enter and succeed in college and manage their student loans, such as financial literacy and debt management skills.
• Prepare students and workers for competitive jobs by investing $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs.
Additional Information:
Myth/Fact document on student loan reform
Fact Sheet on student loan reform
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