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March 26th, 2010
Grijalva Touts $61 Billion Savings, New Benefits for Students and Universities in Student Lending Reform Package

Washington, D.C. – Rep. Raúl M. Grijalva today highlighted the new benefits of the Student Aid and Fiscal Responsibility Act, which passed as part of this week’s historic health care reform package. The law saves $61 billion in taxpayer money over the next decade and includes a $36 billion increase in Pell Grants over that period, which is projected to assist at least 1 million low-income students.

The new law includes a variety of assistance measures for students and universities, including:

•$750 million to promote college access and completion, including financial literacy and student retention.

•Lowering the maximum repayment cost for student borrowers in the Income Based Repayment program from 15 percent of discretionary income per month to 10 percent.

•$1.5 billion to IBR to help manage the loan debts of newly graduated students entering the workforce.

•$2.55 billion to support Minority Serving Institutions and Historically Black Colleges and Universities.

•$2 billion in competitive grants for Community Colleges to develop education and career training programs.

The law shifts the source of student loans from banks to the Department of Education, which creates a stable and reliable lender for schools. Loans will continue to be serviced, but no longer funded, by private lenders who must ensure quality and whose employees must be in the United States.

“This is a great common-sense way to save money and increase opportunity for students,” Grijalva said of the measure. “Maintaining banks’ status as middlemen in the student loan market is a good deal for banks, but it leads to unnecessary fees and makes no sense for American students and parents. These changes will lead to less paperwork, fewer headaches and more successful students for years to come.”

As the cost of higher learning continues to rise, Grijalva said, “saving money in this way and putting it to better use allows us to make good on the promise of an education for every American who wishes to pursue one. Faced with a choice between paying banks billions in service costs each year or extending that money directly to students, Congress took the right path, and I’m proud to have been a part of that decision.”

For more information about SAFRA, contact the House Committee on Education and Labor at (202) 225-3725.

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