WASHINGTON, D.C. – With this year’s college graduates preparing to enter one of the toughest job markets in years, today Democratic lawmakers announced new benefits that will take effect July 1 that will make college more affordable for students and allow borrows to cap their monthly student loan payments at a reasonable percentage of their income.
The benefits were established under the College Cost Reduction and Access Act, a law Congress enacted in 2007 that provided an additional $20 billion in federal student aid for students at no additional cost to taxpayers.
The benefits were established under the College Cost Reduction and Access Act, a law Congress enacted in 2007 that provided an additional $20 billion in federal student aid for students at no additional cost to taxpayers.
The lawmakers highlighted the benefits today – almost a month and a half early – to increase public awareness as students prepare to graduate college and families work to finalize their financial aid award packages for the coming year.
“With graduation season here and families currently weighing next year’s financial aid packages, it’s critical for students, families and workers to know – right now – that additional relief is on the way,” said U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee and the author of the law. “Every little bit of help counts in this economy. These benefits will make a serious difference for college students and borrowers working hard to pay for college or pay down their student loan debt.”
“The federal government must help colleges and universities continue to prepare people to enter the work force and ensure that higher-education institutions remain economic engines for their communities and regions,” said U.S. Rep. Tim Bishop (D-NY), a member of the committee and a former college provost. “The dream of a college education is dependent upon access and affordability, both of which should be pillars of our long-term economic recovery plans.”
Of the 1.2 million jobs lost last year, 60 percent were held by workers aged 25 or younger. Their wages may also suffer: Economists have found that workers who graduated during recessions typically earn less over a lifetime than workers who graduate in better economic times. Many borrowers already spend high percentages of their paychecks making student loan payments – and it’s only likely to get worse.
Beginning July 1, for the first time, students and borrowers will be able to participate in a new Income-Based Repayment program that caps their monthly loan payments at just 15 percent of their discretionary income. Any current or future borrower whose loan payments exceed 15 percent of their discretionary income will be eligible. After 25 years in the program, borrowers’ debts will be completely forgiven.
Other benefits include:
In addition, students and borrowers will be able to continue to take advantage of other recent programs enacted under the law that will make it easier for graduates to go into public service fields while grappling with student debt.
To encourage more students to become teachers, the law provides up-front tuition assistance, known as TEACH Grants, of $4,000 a year – for a maximum of $16,000 – to students who commit to teaching high need subject areas in high need schools for four years after graduation. (These grants first went into effect for the 2008-2009 school year.)
Graduates who enter into public service careers, such as teachers, public defenders and prosecutors, firefighters, nurses, non-profit workers and more, will be eligible for complete loan forgiveness after 10 years of qualifying public service and loan payments. (This program began on October 1, 2007.)
To view a fact sheet on these various benefits, click here.
For more specific information on how the new Income-Based Repayment program will work and who will qualify, click here.
For more information on the College Cost Reduction and Access Act, click here.
For more information on the American Recovery and Reinvestment Act, click here.
“With graduation season here and families currently weighing next year’s financial aid packages, it’s critical for students, families and workers to know – right now – that additional relief is on the way,” said U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee and the author of the law. “Every little bit of help counts in this economy. These benefits will make a serious difference for college students and borrowers working hard to pay for college or pay down their student loan debt.”
“The federal government must help colleges and universities continue to prepare people to enter the work force and ensure that higher-education institutions remain economic engines for their communities and regions,” said U.S. Rep. Tim Bishop (D-NY), a member of the committee and a former college provost. “The dream of a college education is dependent upon access and affordability, both of which should be pillars of our long-term economic recovery plans.”
Of the 1.2 million jobs lost last year, 60 percent were held by workers aged 25 or younger. Their wages may also suffer: Economists have found that workers who graduated during recessions typically earn less over a lifetime than workers who graduate in better economic times. Many borrowers already spend high percentages of their paychecks making student loan payments – and it’s only likely to get worse.
Beginning July 1, for the first time, students and borrowers will be able to participate in a new Income-Based Repayment program that caps their monthly loan payments at just 15 percent of their discretionary income. Any current or future borrower whose loan payments exceed 15 percent of their discretionary income will be eligible. After 25 years in the program, borrowers’ debts will be completely forgiven.
Other benefits include:
- Cheaper interest rates on need-based (subsidized) federal student loans. On July 1, interest rates on these loans will continue to drop, from 6 percent to 5.6 percent. This is the second of four annual cuts in this interest rate; it will continue to drop until it reaches 3.4 percent in 2011. Nationwide, about 5.5 million students take out subsidized student loans each year.
- Higher Pell Grant scholarships for low- and moderate-income students. Due to funding boosts provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act, the maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350 – more than $600 above last year’s award. About 6 million students receive this scholarship each year.
In addition, students and borrowers will be able to continue to take advantage of other recent programs enacted under the law that will make it easier for graduates to go into public service fields while grappling with student debt.
To encourage more students to become teachers, the law provides up-front tuition assistance, known as TEACH Grants, of $4,000 a year – for a maximum of $16,000 – to students who commit to teaching high need subject areas in high need schools for four years after graduation. (These grants first went into effect for the 2008-2009 school year.)
Graduates who enter into public service careers, such as teachers, public defenders and prosecutors, firefighters, nurses, non-profit workers and more, will be eligible for complete loan forgiveness after 10 years of qualifying public service and loan payments. (This program began on October 1, 2007.)
To view a fact sheet on these various benefits, click here.
For more specific information on how the new Income-Based Repayment program will work and who will qualify, click here.
For more information on the College Cost Reduction and Access Act, click here.
For more information on the American Recovery and Reinvestment Act, click here.
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