In a conference call with reporters from Northeast and Mid-Atlantic college newspapers, United States House Majority leader Steny Hoyer (D-MD) summarized and answered questions regarding the College Cost Reduction Act, the largest student aid bill in 60 years.
According to Hoyer, more than 200,000 students a year either don’t go to or hold off going to college due to financial reasons.
“Our country cannot afford to price students out of the market,” said Hoyer. “We understand that colleges students are not only very interested, but very engaged.”
The bill was introduced by Rep. George Miller (D-CA), and goes to the president to be signed into law this week. The multiple benefits of the bill come to students at no new cost to taxpayers.
Instead, subsidiaries paid to private loan companies have been redirected to directly aid students. There are several parts to the bill, all of them designed to increase the amount of financial aid to the tune of $20 million over the next 5 years. Included in this boost is a raising of the maximum value of the Pell Grant scholarship. Worth $4050 in 2006, the need-based scholarship is set to increase to $5200 by 2013.
Roughly 5.5 million low to moderate-income students would benefit from these changes.
Another situation in the CCRA is the stringent and inflexible loan requirements that go along with many loans and scholarships. When coupled with the complex application process, these requirements close the door to higher education on many qualified students. The CCRA, however, addresses this problem by simplifying the application and analysis processes as well as tweaking the Increased Income Protection Allowance.
This means that a student, as well as that student’s family, can make more money while still receiving financial aid, helping families whose assets may look better on paper than in reality. The CCRA also reduces interest rates on student loans from the current 6.8 percent to 3.4 percent over the next five years. The average savings to the 6.8 million students who take out need-based loans each year would be $4,400 over the life of the loan.
The average starting salary for a teacher in 2004 was $31,704- not nearly enough to offset the nearly unmanageable student debts most face. Under the CCRA, students who commit to teaching a high-need subject in a high-need area for four years would receive $4,000 in up-front tuition assistance, to a maximum of $16,000, in either their undergraduate or graduate careers. The low salary and high costs of becoming a teacher is the greatest deterrent to most students intending to pursue a career in teaching.
Other public servants, such as first responders, law enforcement officers, firefighters, nurses and prosecutors would also receive assistance under the CCRA. Under the bill, the maximum repayment period for public servants would change to ten years from twenty-five, reducing the strain.
“We want to do anything we can to encourage people to get into public service,” said Senator Chris Murphy (D-CT).
In Massachusetts, the expected increase in loan and Pell aid to students and families over the next five years stands at $522,318,000. Massachusetts students who take out need-based loans each year currently number 98,990, with 77,196 receiving the Pell Grant. The average debt of the graduate of a public school is $13,994 after four years.
