(WASHINGTON, D.C.) – U.S. Rep. Chet Edwards announced that President Bush today signed into law historic college aid legislation passed by Congress.
The legislation makes college more affordable and provides the single largest investment in college student financial assistance since the 1944 GI Bill, $20 billion, at no new cost to U.S. taxpayers. It also cuts student loan interest rates in half over the next four years, saving the typical student borrower in Texas $4,550 over the life of their loan.
The new law also increases the Pell grant from $4,310 to $5,400 by 2012.
“Keeping the doors of our colleges and universities open to bright, hard working students is not only important for their future, it is critical for the future of our nation,” said Edwards. “If America is going to compete in the global economy, we must knock down the financial barriers that are making it harder for qualified students to pursue a higher education. This legislation will help millions of students and families pay for college – and do so at no new cost to U.S. taxpayers.”
To fulfill the new Congress’ commitment to fiscal responsibility, the legislation pays for itself by reducing excessive federal subsidies paid to lenders in the college loan industry by nearly $20.9 billion and reinvesting that money back into student financial aid, resulting in a $750 million reduction in the federal deficit.
About 5.5 million students nationwide (427,159 in Texas alone) would see their maximum Pell grant increase from $4,310 to $5,400 by 2012, an increase of $1090.
The bill would also cut interest rates on need based student loans from 6.8 percent to 3.4 percent for 6.8 million students (205,508 in Texas alone) by 2011. Interest rates are reduced to 6% on July 1, 2008, 5.6% on July 1, 2009, 4.5% on July 1, 2010, and 3.4% on July 1, 2011. Once fully phased-in, this would save the typical student borrower in Texas – with $14,233 in need-based student loan debt – $4,550 over the life of the loan.
“More than ever, the health of our economy depends on having a highly-skilled and well-educated workforce. Keeping a college education affordable is the key to strengthening the American economy and protecting our standard of living,” Edwards said. “Hard-working families are already facing fast rising costs for tuition, college textbooks, health care and home utility bills. The previous Congress, over my objections, made higher education less affordable by cutting $12 billion out of college student financial assistance. I am grateful the new Congress has reversed those ill-advised cuts and has chosen to invest wisely in our students and our nation’s future.”
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 income on loan repayments, and eliminate a three-year limit for deferment of loan payment for members of the armed forces.
Students who pursue careers as public school teachers would receive pre-paid tuition assistance of $4,000 per year — with a maximum of $16,000 — if they commit to teaching a high-need subject in a high-need school for four years.
President Franklin Roosevelt signed the GI Bill into law in 1944. The original law enabled 7.8 million veterans of World War II to participate in education or job training programs.