McNerney Supports Historic College Aid Increase
| Bill Would Boost Scholarships and Reduce Loan Costs at No New Taxpayer Expense |
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July 11, 2007 |
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Washington, DC – Today, Congressman Jerry McNerney (CA-11) voted to approve legislation that would increase college financial aid – the single largest investment in college financial aid since the 1944 G.I. Bill. The bill will help millions of students and families pay for college – at no new cost to U.S. taxpayers.
The legislation, the College Cost Reduction Act of 2007, HR 2669, which the House passed by a vote of 273-149, would boost college financial aid by about $18 billion over the next five years. The legislation pays for itself by reducing excessive federal subsidies paid to lenders in the college loan industry by $19 billion.
“This legislation will make college more affordable for millions of students. It is a historic step in expanding access to a college education for millions of Americans,” Rep. McNerney said. “Having an educated workforce is fundamental to ensuring our nation’s continued economic leadership in the world.”
Under the bill, the maximum value of the Pell Grant scholarship would increase by $500 over the next five years. When combined with other Pell scholarship increases passed or proposed by Congress this year, the maximum Pell Grant would reach $4,900 in 2008 and $5,200 in 2011, up from $4,050 in 2006. About 6 million low- and moderate-income students would benefit from this increase.
The legislation would cut interest rates in half on need-based student loans, reducing the cost of those loans for millions of student borrowers. Like legislation passed by the House earlier this year, the College Cost Reduction Act would cut interest rates from 6.8 percent to 3.4 percent in equal steps over the next five years. Once fully phased-in, this would save the typical student borrower – with $13,800 in need-based student loan debt – $4,400 over the life of the loan.
The legislation would also prevent student borrowers from facing unmanageable levels of federal student debt by guaranteeing that borrowers will never have to spend more than 15 percent of their yearly discretionary income on loan repayments and by allowing borrowers in economic hardship to have their loans forgiven after 20 years.
Additionally, the bill makes a $500 million investment in Hispanic Serving Institutions, like San Joaquin Delta College, along with Historically Black Colleges and Universities and other minority serving institutions.
“This bill is a landmark piece of legislation in many aspects. This will allow community colleges, like San Joaquin Delta College, to achieve even greater success with historically underrepresented students,” said Dr. Paul Rodriguez, President of San Joaquin Delta College. “Community colleges are the gardens that grow the middle class and this legislation will enhance that capacity by cutting interest rates on student loans and by increasing other types of financial aid, such as Pell Grants.”
The College Cost Reduction Act includes a number of other provisions that would ease the financial burden imposed on students and families by the cost of college, including:
“This is the best news for potential students and for our currently enrolled students who may be struggling with costs of their education and in the repayment process,” said Dr. Thais Kishi, Dean of Los Medanos College’s Brentwood Center. “Especially attractive [in this bill] are the ‘incentives’ for future teachers and public servants.”
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