Washington, D.C. – Today, the U.S. House Education and Labor Committee passed legislation that will make college even more affordable, at no new cost to taxpayers.
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 some of President Obama’s key education priorities.
The bill now goes to the House floor for a full vote.
Congressman Raúl M. Grijalva, a member of the Committee, worked to include language to improve the bill, including helping to extend the aid to Minority-Serving Institutions for 10 years, and to ensure that diversity and cultural awareness are integral parts of the early learning challenge grants. Adjustments to the bill will also maintain the current subsidized loan levels for graduate students as opposed to the reductions proposed in the bills original draft.
“This important piece of legislation will help America’s college students and their families with the rising costs of a higher education,” said Grijalva. “The Student Aid and Fiscal Responsibility Act will reform our higher education system so that it operates in the best interests of students and keeps our promise of making college more affordable for America’s low and middle-income families. The bill also takes vital steps to providing needed resources for early education for children most in need”.
The bill embraces President Obama’s FY 2010 budget proposal to originate all new federal student loans through the Direct Loan, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan 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. The savings can then be used to increase the availability of Pell Grants for our students with the greatest need.
The legislation will also 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 – preserving a role for lenders and maintaining jobs in communities throughout the country.
The legislation will:
•Invest $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019.
•Invest $3 billion to bolster college access and completion support programs for student;
•Strengthen the Perkins Loan program, a campus-based program that provides low-cost federal loans to students;
•Keep 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 set to jump from 3.4 percent to 6.8 percent in 2012 without this legislation;
•Simplify financial aid forms through reduction of questions related to eligibility;
•Invest $1.2 billion in Minority-Serving Institutions to provide students with the support they need to stay in school and graduate;
•Provide funds to modernize and repair facilities from elementary and secondary schools to community colleges.
•Establish early learning challenge grants to address our commitment to early education by providing $1 billion dollars to increase the number of low-income children from birth to 5 in high quality early learning programs.
•Establish community college challenge grants that will help to implement the President’s graduation initiative by supporting innovative pilot programs and policies that promote completion of higher education degrees and promote transfer of credits between institutions.