College students will be getting a financial break, thanks to bi-partisan approval today to an educational finance package that increases Pell Grants to low and middle income students over the next four years and alters the ground rules for student loans.
Both the House and Senate approved the changes, and in the bi-partisan Senate vote the numbers came in 79-12 in favor of the changes, with Democrats citing this win as one campaign promise fulfilled.
“We need a bold new commitment that will enable the current generation of Americans to rise to the global challenges we face. Today we will help millions of students achieve the American dream.”
–Sen. Edward Kennedy, Senate Education Committee Chair
The bill cut $20 billion in subsidies to lenders and applied much of that funding to direct student aid via the Pell Grant program, essentially restoring nearly $12 billion dollars that Republicans cut from the program last year. Pell Grant awards will rise from the current maximum of $4310 to $5300 a year over the next four years.
Representative George Miller of California, Democratic Chairman of the House Education Committee, said “we took 11.39 billion and put it back into Pell Grants. That’s the difference an election makes. ”
The House-Senate Conference Committee negotiated a number of changes to the student loan program, including loan forgiveness to students who work ten years or more in public service areas such as teaching, firefighting and police services, limiting loan repayment schedules to 15% of discretionary income, and cutting interest rates by half on student loans over the next five years.
The student loan industry has campaigned against the cuts, but faced an uphill battle against charges of potential conflicts of interest involving gifts and travel offers, and provision of financial incentives to college officials in exchange for steering college students to their institutions.
House Republicans called the loan forgiveness clause for specified provisions a form of “socialism” while representatives of the student loan industry said the reduction in lender subsidies would ultimately weaken their ability to provide loans to students and charged that the legislation “did nothing” to reduce the cost of college.
The bill will now move to the oval office for the signature of President Bush. Education Secretary Margaret Spellings said the bill “answered the President’s call” for more Pell Grant funding.
With many colleges and universities substantially increasing fees to offset caps on tuition increases, and with the cost of many colleges topping $30,000 a year in tuitions, fees, housing and meals, students have been caught in financial trap that sees many students graduating with tens of thousands of dollars of debt.