The College Cost Reduction Act includes a variety of provisions to make college education more affordable. The bill would increase the maximum Pell Grant available to students from low-income families by $500 over the next four years, to $5,200. At the same time, eligibility for Pell Grants would expand. The legislation would reduce interest rates for federally-subsidized student loans, guarantee that borrowers earning a low income will not have to pay more than 15 percent of their income to repay student loans, and enable borrowers to have their loans forgiven after 20 years. Graduates that pursue careers in public service, including work as a nurse or firefighter, would be eligible for more extensive loan forgiveness, while those who commit to teach in a high-poverty school could also receive immediate tuition assistance. The legislation would provide incentives for colleges to keep tuition costs low and federal financial penalties for states that fail to invest in higher education. Finally, the bill increases grants to colleges that serve predominantly African-American, Hispanic, and Native American students. The legislation would cost an estimated $18.7 billion, to be paid for by reducing federal subsidies to companies that provide student loans.
The Middle-Class Position:
The Middle Class Supports. In today’s world, a college education is necessary to attain a middle-class standard of living. A college-educated workforce is also critical to the nation’s economic strength. Yet the cost of college, and the amount of debt students must take on to afford it, is rising rapidly. The value of federal student aid programs, such as Pell Grants, has failed to keep pace with rising college costs, while many states have reduced their support for public universities. As a result, nearly two thirds of students at four-year colleges must now borrow to finance their college education, and the typical student borrower now graduates with nearly $20,000 in debt – and some with much more. The prospect of taking on tens of thousands of dollars in debt deters some students, especially those from lower-income families, from pursuing college entirely. Meanwhile, the need to pay off costly student loans makes it impractical for many graduates to pursue public service careers in essential fields such as teaching or social work. For many young people, the burden of student loan debt makes it difficult to make ends meet on a daily basis, much less support a family or begin to save for retirement. Through its wide array of measures to make a college education more affordable – including the groundbreaking effort to encourage colleges not to raise tuition, while prodding states to strengthen their investment in higher education – this bill will help millions of American young people attend college and begin their working lives without such an overwhelming burden of debt.
From the Experts:
“At a time when getting a college degree has become a near necessity for entry into the middle-class, our nation’s primary ladder of opportunity is broken… Today, rising tuition and anemic federal financial aid has created what I call a ‘debt-for-diploma system.’ The debt-for-diploma system affects young adults’ choices about college, including where they enroll and whether or not they complete their degree. The debt-for-diploma system also exerts powerful influence on young adults even after they leave college…impacting their financial stability long after they’ve accepted their diploma.”-Tamara Draut, Director of the Economic Opportunity Program, Dēmos, and Author of Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead
(February 16, 2007)
“For much of our history, the United States led the world in expanding access to higher education. From the establishment of land grants institutions, to the G.I. Bill, through the Higher Education Act of 1965 and the creation of Pell Grants in 1972, the United States Congress has shown true leadership on this issue. The return on our investment in expanding access to higher education has been incalculable, contributing both to domestic prosperity and international leadership… [Yet] our recent history is one of shrinking opportunity and growing income gaps. One important reason is that, over the last fifteen years, there has been a massive shift in financial aid policy away from helping low-income students. Today, there is less social mobility in America than there was twenty years ago and less than in almost any other industrialized country.”–Ross Weiner, Vice President for Program and Policy, The Education Trust
“By saddling students with increasingly unmanageable debt burdens we undermine the very opportunity that makes education so valuable. The College Cost Reduction Act of 2007 is consistent with our nation’s promise of affordable higher education to all who seek it. In light of the growing challenge students face paying for college, this legislation is necessary to sustain this promise for the next decade.”–Luke Swarthout, U.S. PIRG Higher Education Project (June 13, 2007)
Beyond this Bill:
Given the importance of college access to both individual students aspiring to the middle class and the global competitiveness of the nation, even more funding for student aid – especially aid to students from low-income families – is needed. The $500 increase in the maximum Pell Grant, while welcome, is particularly inadequate to meet the rising costs of college tuition for the poorest students.
Total amount the average four-year college student with a subsidized Stafford loan would save under this bill if they start school in 2011, when the cut is fully phased in: $4,420
Percentage of college graduates under age 35 that are paying off college debt who say their loans will take them more than ten years to pay off: 39
Percentage of them who say they have delayed a medical or dental procedure because of their debts: 27
Proportion who say their college loan debts have caused them to delay getting married: 1 in 6
Price that private investors paid in 2007 to purchase Sallie Mae, the student loan company which began as an enterprise run by the government for the benefit of college students: $25 billion
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