Pell Grant Scholarship Increases Today for Millions of Students
WASHINGTON, D.C. – Student aid benefits increase today, as the Pell Grant scholarship increases to an all-time high and interest rates on need-based student loans decrease. Additionally, all federal student loans will originate through the Direct Lending program, as a result of a measure passed earlier this year that eliminates wasteful subsidies to banks and invests those savings to help students and families, all at no new cost to taxpayers. “Today, students and families working hard to pay for college get some much-needed relief,” said U.S. Rep. George Miller (D-CA), chair of the House Education and Labor Committee and author of the Student Aid and Fiscal Responsibility Act. “These new benefits build on the premise that in this country, no one should have to mortgage his or her future to get a good education.”
The reliable and cost-efficient federal Direct Loan program provides students with the same loans as banks – but at a cheaper price for taxpayers by removing unjustified subsidies. Private lenders and banks will still have a role in servicing all federal student loans, which will guarantee borrowers high-quality customer services, maintain jobs in the private sector, and even protect jobs from being shipped overseas. Direct student loans, unlike loans made by banks, must be serviced by U.S. workers.
For the upcoming academic year, the Pell Grant scholarship will increase to $5,550 and, beginning in 2013 the maximum scholarship will increase with the cost of inflation by linking the scholarship to the Consumer Price Index. Approximately 8 million U.S. students rely on the Pell Grant scholarship each year to help pay for college.
For student borrowers, interest rates on the subsidized federal student loans will decrease from 5.6 percent to 4.5 percent. This is a benefit passed as part of the College Cost Reduction and Access Act.
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