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WASHINGTON - Congressman Charles B. Rangel and fellow Democrats celebrated Wednesday as the U.S. House of Representatives passed an $18 billion college aid package that helps millions of students and families pay for college at no new cost to taxpayers. .
"This bill is just one step in making sure that the doors of opportunity remain open in this country," said Congressman Rangel. "It ensures that the bridge to college and the American Dream remains open for all hard-working students and not just to families that can afford it."
The College Cost Reduction Act of 2007 (H.R. 2669), which the House passed by a vote of 273-149, represents the largest single investment in college aid since the G.I. bill in 1944. It would increase the maximum value of the Pell Grant Scholarship by $500 over the five years, cut interest rates in half on need-based student loans and forgive loans for college graduates that enter certain public service professions. It would also commit close to $500 million to Historically Black Colleges and Universities (HBCUs), Hispanic serving institutions (HSI's) and other minority serving educational institutions.
Locally, estimates released by the House's Education and Labor committee indicate that New York State could received as much as 1.1 billion in increased loan and grant aid over five years.
"We can't expect to continue to be a world leader and economic superpower if we don't provide our people with the resources that they need to succeed," said Rangel, the Chairman of the House of Representatives' Ways and Means committee. "Every day, global competitors like China and India are investing more and more money in their education and healthcare systems. If we don't make the match or exceed those kinds of investments, we will quickly find ourselves behind economically, our businesses without the talent they need to thrive."
The legislation, which is expected to be taken up by the Senate later this month, pays for itself by reducing excessive federal subsidies paid to lenders in the college loan industry by $19 billion. It also includes nearly $1 billion set aside to reduce the federal budget deficit.
GIVING STUDENTS FINANCIAL FLEXIBILITY
The additional funding not only restores the purchasing power of the Pell scholarships, but also expands the number of eligible students by almost 600,000. 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. Over 420, 000 New York students alone would benefit from the Pell Grant increase.
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 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. It would also allow borrowers in economic hardship to have their loans forgiven after 20 years.
In addition to committing money to minority-serving institutions, the additional funding also has the potential to also make a real difference in the lives of African American and Latino students. Approximately 47 percent of all African-American students and 37 percent of Hispanic students receive Pell Grant scholarships each year. Approximately, 38 percent of African Americans and 25 percent of Latinos take out need based loans.
All this, Rangel hopes, will make it easier for students in his district and around the nation to concentrate more on passing exams than paying bills. .
"For too many students, college occurs in the time between two or three jobs, unable to take certain classes or internships because they have to work," said Rangel. "By making college costs more affordable, we not only reduce the stress on students and families, but also remove one more obstacle to greater earning power and social mobility.".
REWARDING STUDENTS & PUBLIC SERVANTS
If signed into law, the legislation also promises to provide additional financial options for those students who want to give back to their local communities or government. It would provide $4,000 per year to $16,000 tuition assistance to undergraduate and graduate students who commit to teaching in the nation’s public schools. Public servants would receive loan forgiveness of $5,000, with certain public sector employees receiving complete loan forgiveness after 10 years of service.
Just as important, it would also increased federal loan limits so that students won’t have to rely as heavily on costlier private loans.
"Many our best and brightest students, especially first generation college graduates, are torn between going into the public sector and meeting their personal or familial financial obligations," said Rangel. "While this won't make anyone rich overnight, it hopefully will make it easier for more people to make a financial sacrifice in order to serve their community and their country.
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