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WASHINGTON, DC -- Top Democrats on the House Education and the Workforce Committee today unveiled a key proposal to boost college opportunities for low- and moderate-income students at no new cost to taxpayers – in sharp contrast to the Republican plan to take $11 billion out of federal student assistance, the largest cut in the history of federal student aid programs. The committee is voting Wednesday on changes to the Higher Education Act.
The Democratic plan, among other things, would boost Pell grants by $500 per eligible student and save student borrowers as much as $6,000 over the course of their loans.
Republicans, under intense pressure from student groups, Democratic lawmakers, and newspaper editorial boards, have finally agreed to reduce or eliminate billions of dollars of unjustified and wasteful subsidies paid to banks and lenders in the student financial aid industry. But rather than funnel those savings – $11 billion worth – back into lending programs that will help students pay for college and spur U.S. economic growth, the Republican bill being considered Wednesday would take that money out of the lending system altogether because of instructions from the House leadership to help pay for the massive federal budget deficit created by Republicans’ own reckless fiscal policies.
“Their bill is going to make it harder for students and families to pay for college – plain and simple,” said Representative George Miller (D-CA), the senior Democrat on the committee. “In one of the most important bills to come before this committee, Republicans have chosen to make students pay for the reckless fiscal policies of the Bush Administration, undermining students and our economy at the same time. Their bill makes the largest cut to student financial aid in history.”
The Democratic proposal would significantly boost affordable college opportunities and thereby also help restore American economic competitiveness. Their plans includes:
- Boosting by $500 the maximum Pell grant scholarship over the next five years. Today, the Pell grant is worth $800 less in inflation-adjusted terms than it was worth in 1975-76. The boost would occur in five $100 steps over the next five years, for a $4,550 maximum grant by 2010;
- Giving students the choice between either a fixed or variable interest rate when they consolidate their student loans, and it would do so without raising costs for students; and
- Maintaining the promise Congress made in 2002 to cap the interest rate on student loans at 6.8 percent. In 2002, Democrats and Republicans worked together to lower the cap on student loans to 6.8 percent, to become effective in 2006. The Republican bill reverses that bipartisan agreement and repeals the change.
These proposals would be paid for through the billions of dollars that are freed up in the GOP bill by cutting bank and lender subsidies.
By contrast, the Republican bill would:
- Divert 20 percent of student aid money over 6 years out of the lending system to pay for GOP-created deficits;
- Force students to pay billions more in higher interest rates; and
- Fail to expand educational opportunities to low- and middle-income families.
“Unlike the Republican higher education bill, our proposal cuts excessive subsidies to banks and reinvests that money in college opportunities,” said Miller. “Unlike the Republican legislation, our proposal does not force students to bear the burden of Republicans’ irresponsible governing, which has led to huge deficits. We support putting students and families first -- it’s good for our economy and it’s the right thing to do.”
“Democrats believe that college should be affordable and accessible to every American who wants to attend college, and our new initiative takes a giant step towards this goal,” said Rep. Dale Kildee, the senior Democrat on the Subcommittee on 21st Century Competitiveness, which oversees higher education. “Our proposal will save the typical borrower more than $6,000 on his or her college loans and provide a $500 boost to the maximum Pell grant – at no additional cost to taxpayers or students.”
For more information on Higher Education, go to: http://edworkforce.house.gov/democrats/education_higher.shtml.
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