Washington, D.C. – Rep. Raúl M. Grijalva today highlighted the one-year anniversary of the Student Aid and Fiscal Responsibility Act, the landmark college aid investment law paid for by eliminating taxpayer subsidies to banks. The law invests $36 billion over the next 10 years to improve the Pell Grant program, increasing the maximum grant to $5,550 in 2010 and to $5,975 by 2017.
Starting in 2013, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index. This includes an investment of $13.5 billion to fund a shortfall in the Pell Grant scholarship program due to increased demand for the scholarship.
These, among other provisions, will help the 601,345 Arizona students currently receiving Pell Grants, according to the Department of Education.
Other provisions include:
– Investing $1.5 billion to strengthen an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. The law lowers this monthly cap to 10 percent for new borrowers after 2014.
– Investing $37,125,460 in Arizona’s Historically Black Colleges and Universities and Minority-Serving Institutionsto provide students with the support they need to stay in school and graduate.
– Converting all new federal student lending to the cost-effective Direct Loan program. Since July 1, 2010, all new federal student loans have originated through the Direct Loan program instead of through the previous federally guaranteed student loan program run through banks.
– Investing $750 million nationwide to bolster college access and completion support, including $14,658,635 over the next five years in Arizona. The law increases funding for the College Access Challenge Grant program, and funds innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
Under the law, all direct loans are now serviced by private lenders. Because of changes to earlier policies included in the bill, direct loans must now be serviced only by workers in the United States, improving the domestic job market and prohibiting offshoring of student financial aid services.
The law will save American taxpayers $61 billion in education costs over the next 10 years and reduce the national debt by at least $10 billion in that time, according to the Congressional Budget Office.