“My thoughts and prayers are with Senator Ted Kennedy, Rep. Patrick Kennedy, and the entire Kennedy family on this difficult day. Today, we mourn the loss of a leader who inspired and changed the lives of millions of Americans. When Eunice Kennedy Shriver founded the Special Olympics, she gave thousands of people with disabilities the opportunity to participate in sports when others thought it impossible. In recent years, Mrs. Shriver was instrumental in our efforts to ensure equal college opportunities for students with intellectual disabilities as part of a larger 2008 law that reformed our higher education programs for students and families. Mrs. Shriver dedicated her life to opening up new possibilities for every American living with a disability -- making enormous strides toward true equality for our country. We will honor her incredible spirit as we work to build on her legacy to ensure that Americans with disabilities have equal rights and opportunities to pursue their dreams.”
Higher Education
Managing Your Student Loans: July 1, 2009 College Affordability Benefits Every Borrower Should Know About »
Tips on how to apply for federal student loans and grants »
Key Legislation:
Student Aid and Fiscal Responsibility Act of 2009 »
The Ensuring Continued Access to Student Loans Act of 2008 »
Higher Education Opportunity Act of 2008 »
College Cost Reduction and Access Act »
Student Loan Scandal »
College Student Relief Act »
“My thoughts and prayers are with Senator Ted Kennedy, Rep. Patrick Kennedy, and the entire Kennedy family on this difficult day. Today, we mourn the loss of a leader who inspired and changed the lives of millions of Americans. When Eunice Kennedy Shriver founded the Special Olympics, she gave thousands of people with disabilities the opportunity to participate in sports when others thought it impossible. In recent years, Mrs. Shriver was instrumental in our efforts to ensure equal college opportunities for students with intellectual disabilities as part of a larger 2008 law that reformed our higher education programs for students and families. Mrs. Shriver dedicated her life to opening up new possibilities for every American living with a disability -- making enormous strides toward true equality for our country. We will honor her incredible spirit as we work to build on her legacy to ensure that Americans with disabilities have equal rights and opportunities to pursue their dreams.”
“The men and women who have made enormous sacrifices to serve our country deserve every opportunity to get a good education when they return home,” said U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee. “This common-sense change will help them do just that. I applaud Secretary Shinseki, the Obama administration, and the state of California for taking action to ensure that veterans can receive the full amount of financial aid they are eligible for this coming year, regardless of what type of college they attend. Making sure that veterans who want to attend college in California can afford to do so is the right thing to do for our students, our university system, local economies throughout our state, and our competitive future.”
BACKGROUND
The new GI Bill authorizes the VA to pay the actual tuition and fees charged by a college for up to the maximum in-state tuition and fees charged by the most expensive public university in the state.
Students attending college in California would have been adversely affected by this calculation because the state’s public schools are barred from using the word “tuition” and instead must use the word “fees” when describing an institution’s cost. Therefore, a veteran who attends a private college in California would have received a much lower tuition benefit under the GI Bill than veterans at private schools in other states.
This new agreement will allow for the bulk of California’s “fees” to be characterized as “tuition” for the purposes of paying for the cost at private colleges – removing any unfair penalty that could reduce aid for veterans.
Two weeks ago, the House Education and Labor Committee, with the strong encouragement of the Obama administration, took a step toward ending the false premise that private lenders are full partners in the federally subsidized college loan program. If a bill approved by the committee becomes law, private lenders will be cut out of this program and will have to stop dining at their taxpayer-provided trough.Learn more about the benefits of the Student Aid and Fiscal Responsibility Act and read Mr. Cranford's complete column.
....
The lenders have held up the pretense that they provide better service than does an arm of the federal government and that there are actually differences among bank loans, so that students stand to benefit by picking one over the other.
Sorry, but that notion is a sham. Congress has long required that the terms of these loans be identical, regardless of whether they are issued by the government or a private lender. It doesn’t matter to the student where the money comes from — the dollar amounts, the interest rates and even the repayment terms are virtually the same.
For taxpayers, though, there is a difference, and it’s a big one. In the case of presumed “private” loans, the government pays more than it does for “direct” loans — billions of dollars more — because it guarantees the principal amount and it promises a minimal return to the lender. Banks are supposed to be compensated for taking risks, but in the case of government-subsidized student loans, they incur almost no risk. Yet they get compensated anyway.
Moreover, there’s ample evidence that some private lenders have engaged in questionable or worse behavior to persuade colleges to funnel student borrowers their way. When money is free, people will do all sorts of things to get their hands on it. And that raises questions about why lawmakers would want to perpetuate a system that promotes graft, as well as waste.
For the second time in two days, Republicans asked the Congressional Budget Office to manipulate an analysis of the Student Aid and Fiscal Responsibility Act (H.R. 3221), a bill that will invest almost $90 billion in additional student aid for families and pay down the deficit – and at no cost to taxpayers.
As Mr. Burd so elegantly points out:
If there is anything that we learned from the "pay for play" student loan scandal, it is how little choice borrowers in the FFEL program actually have. Don't forget that in 2007, the Education Department found that one lender made at least 80 percent of students' federal loans at 921 participating colleges. That same year, the research firm Student Marketmeasure reported that 1,412 FFEL schools had one loan provider that made 80 percent of their students' federal loans, with 531 of those colleges recommending only a single lender to their students. What kind of a choice is that?
and as Rep. Tim Bishop (D-NY), a former Provost of Southampton College where he worked for 29 years, said at the markup of the Student Aid and Fiscal Responsibility Act, "I never once encountered a student who was focused on choice. What they were focused on was 'Can I get the money?' and 'Can you guarantee me that I can get the money?'"
We encourage you to read Mr. Burd's complete post as well as learn more about the Student Aid and Fiscal Responsibility Act.
The analysis does not change the official score of the bill, the Student Aid and Fiscal Responsibility Act of 2009, which estimates that it will save $87 billion over 10 years, or the fact that it is fiscally responsible. All of those savings will be invested in additional aid to help student and families pay for college, to improve early learning opportunities for young children, and to pay down the deficit.
The federal college loan program that pays private lenders a generous subsidy to make loans that are guaranteed by the government is an enormous waste of money that has long served more to enrich lenders than to help students.That is why the Education and Labor Committee passed the Student Aid and Fiscal Responsibility Act with bipartisan support yesterday. As the New York Times editorial explains:
[It] would end the unnecessary private lending subsidies and plow the savings into important education programs. The bill, for example, devotes $40 billion to the all-important Pell grant program, which has allowed millions of poor and working-class students to attend college.Learn more about the Student Aid and Fiscal Responsibility Act and read the entire New York Times' editorial.
It would spend $8 billion on early-education programs and $10 billion on an initiative aimed at strengthening community colleges. It sets aside $4 billion for a school modernization and improvement program.
The consolidated program proposed in the bill would in no way expand government. The loans would be handled through colleges. They would be serviced and collected by private companies and nonprofits that are already lining up to get the work. By forcing the companies to compete, and to undergo periodic re-evaluations, Congress could get a good deal for taxpayers and better service for borrowers.
The legislation, the Student Aid and Fiscal Responsibility Act of 2009, will generate almost $100 billion in savings over the next ten years that will be used to boost Pell Grant scholarships, keep interest rates on federal loans affordable, create a more reliable and effective financial aid system for families, and enact President Obama’s key education priorities.
On Tuesday, July 21st, the House Education and Labor Committee will consider legislation that will make college dramatically more affordable by investing billions of dollars in additional student aid, at no cost to taxpayers. The Student Aid and Fiscal Responsibility Act of 2009 will generate almost $100 billion in savings over the next ten years that will be used to boost Pell Grant scholarships, keep interest rates on federal loans affordable, safeguard federal student loan access for families, and enact President Obama’s key education priorities. The legislation, which was introduced earlier today, pays for itself by making the federal student loan programs more reliable, effective and cost-efficient for students, families and taxpayers.
For more information on the legislation, click here.
H.R. 3221 - The Student Aid and Fiscal Responsibility Act of 2009 was reported favorably to the House with an amendment in the nature of a substitute, and that the Committee authorize the Chairman to transmit the bill, with an amendment in the nature of a substitute, to the Committee on Budget in compliance with Section 310 of the Congressional Budget Act of 1974 as the first part of this committee’s recommendations, pursuant to the reconciliation instruction in S. Con. Res. 13 by a vote of 30 to 17.
- President Obama's statement »
- 21st Century School Fund »
(PDF, 63kb) - AFL-CIO »
(PDF, 46kb) - AEC Science & Technology »
(PDF, 121kb) - American Association of Community Colleges »
(PDF 74kb) - American Association of School Administrators »
(PDF, 45kb) - American Association of State Colleges and Universities »
(PDF, 37kb) - American Association of University Women »
(PDF, 63kb) - American Council on Education »
(PDF 37kb) - American Federation of Teachers »
(PDF 77kb) - American Indian Higher Education Consortium »
(PDF, 37kb) - American Institute of Architects »
(PDF, 63kb) - Association for Career and Technical Education »
(PDF, 49kb) - Association of American Universities »
(PDF, 37kb) - Association of Community College Trustees »
(PDF 74kb) - Association of Educational Service Agencies »
(PDF, 63kb) - Association of Jesuit Colleges and Universities »
(16 kb) - Association of Public and Land-grant Universities »
(PDF, 37kb) - Business Roundtable »
(PDF, 52kb) - California Charter Schools Association »
(PDF, 71kb) - Californians for Schools Facilities »
(PDF 328kb) - Campaign for America's Future »
(PDF, 46kb) - Campaign for College Affordability »
(PDF 46kb) - Campus Progress»
(PDF, 26KB) - Campus Progress Action »
(PDF 42kb) - Center for Law and Social Policy »
(PDF, 66kb) - Child Welfare League of America
(PDF 73kb) - Children Now »
(PDF 116kb) - Children's Defense Fund »
(PDF, 74kb) - College Board »
(PDF 378kb) - Council for Opportunity in Education »
(PDF 64kb) - Council of Educational Facility Planners International »
(PDF, 63kb) - Council of the Great City Schools »
(PDF 62kb) - Demos »
(PDF, 46kb) - Early Care and Education Consortium »
(PDF, 60kb) - Easter Seals Disability Services »
(PDF, 132kb) - Ecobuild America »
(PDF 121kb) - Education Finance Council »
(PDF 23kb) - EDUCAUSE »
(PDF, 37kb) - Fight Crime: Invest in Kids »
(PDF, 606kb) - First Five Years Fund »
(PDF, 589kb) - First Focus »
(PDF, 339kb) - Hispanic Association of Colleges and Universities »
(PDF, 37kb) - International Union of Bricklayers and Allied Craftworkers »
(PDF, 63kb) - National Association for College Admission Counseling »
(PDF 54kb) - National Association for the Education of Young Children »
(PDF, 42kb) - National Association for Equal Opportunity in Higher Education »
(PDF, 37kb) - National Association of Child Care Resource & Referral Agencies »
(PDF, 1.34mb) - National Association of Elementary School Principals
(PDF, 51kb) - National Association of Federally Impacted Schools »
(PDF, 47kb) - National Association of Student Financial Aid Administrators »
(PDF 121kb) - National Black Child Development Institute »
(PDF, 84kb) - National Consumers League »
(PDF, 46kb) - National Direct Student Loan Coalition »
(PDF 118kb) - National Education Association »
(PDF 62kb) - National Fraternal Order of Police »
(PDF 44kb) - National Head Start Association »
(PDF, 38kb) - National PTA »
(PDF, 63kb) - National Rural Education Advocacy Coalition »
(PDF, 63kb) - National School Boards Association »
(PDF 111kb) - National Women's Law Center »
(PDF, 34kb) - Organizations Concerned About Rural Education »
(PDF, 63kb) - Pew's Pre-K Now »
(PDF, 24kb) - Rebuild America's Schools »
(PDF, 63kb) - Rock the Vote »
(PDF, 46kb) - State Higher Education Executive Officers »
(PDF 67kb) - The Institute for College Access & Success »
(PDF, 30KB) - UNCF »
(PDF, 37kb) - United States Green Building Council »
(PDF, 72kb) - United States Public Interest Research Group »
(PDF 165kb) - United States Student Association »
(PDF, 970kb) - US Action »
(PDF, 46kb) - Voices for America's Children »
(PDF 73kb) - The Workforce Alliance »
(PDF 41kb) - Zero to Three »
(PDF 50kb)
WHAT:
Full Committee Mark-Up of H.R. 2187 “H.R. 3221, The Student Aid and Fiscal Responsibility Act of 2009”
WHEN:
Tuesday, July 21, 2009
11:00 a.m. ET
Please check the Committee schedule for potential updates »
WHERE:
House Education and Labor Committee Hearing Room
2175 Rayburn House Office Building
Washington, D.C.
This taxpayer money is urgently needed to provide aid to students for whom a four-year college is out of reach. Earlier this week, Obama proposed to infuse $12 billion into community colleges. Another block of savings will give extra funding for Pell Grants and link them with cost-of-living increases.We encourage you to read the entire editorial, as well as learn more about the Student Aid and Fiscal Responsibility Act of 2009.
In this economic climate, Congress must fix the broken system that unnecessarily takes money from taxpayers and students. Educational investments should go straight to students.
UPDATE: We also suggest you read the Washington Post article about Lifelines in the Student Loan Sea.
THE WHITE HOUSE
Office of the Press
Secretary
______________________________________________________________________________
FOR IMMEDIATE
RELEASE July
15, 2009
Statement from the
President on Chairman Miller’s education reform bill
I
applaud Chairman Miller for introducing an education reform bill that will cut
giveaways to special interests, invest in our children’s future, and save
taxpayer’s money.
Chairman
Miller and I are working to end the wasteful subsidies that are given to banks
and private lenders for student loans. Instead, his legislation will make
college more affordable by paying for annual increases in Pell Grants that keep
pace with inflation. He’s also working with us to simplify financial aid
forms and increase graduation rates.
This
legislation will also help us reach the goal I set out in
Finally,
I am proud that this legislation not only pays for itself, but also saves
taxpayers money and reduces the deficit. I look forward to working with
the Chairman and Congress to make this bill even stronger and pass it before
the end of the year.
The legislation, the Student Aid and Fiscal Responsibility Act of 2009, will generate almost $100 billion in savings over the next ten years that will be used to boost Pell Grant scholarships, keep interest rates on federal loans affordable, create a more reliable and effective financial aid system for families, and enact President Obama’s key education priorities.
A Landmark Investment in America’s Economic Future
Americans need affordable, quality education opportunities to help make our economy strong and competitive again. President Obama has identified an opportunity to make historic investments in our economic future by improving early education opportunities and making college dramatically more affordable – and all at no cost to taxpayers.
The Student Aid and Fiscal Responsibility Act embraces the president’s challenge. It will help us reach his goal of producing the most college graduates by 2020 by making college accessible and transforming the way our student loan programs operate. It will expand quality early education opportunities that will put more children on the path to success. It will strengthen community colleges and training programs to help build a highly-skilled, innovative, 21st century workforce ready for the rigors of a global economy. And it will boost the fiscal health of the country our children will inherit by paying down the deficit. (What's in the bill for you?)
- Invests the bill’s savings in making college affordable and helping more Americans graduate
- Provides reliable, affordable, high-quality Federal student loans for all families
- Prepares students and workers for 21st century jobs by providing all Americans with the skills and resources they need to compete
- Ensures that the next generation of students enter kindergarten with the skills they need to succeed in school
- Meets Pay-As-You-Go fiscally responsible principles and reduces the deficit
Create a more reliable, affordable, student-focused federal loan program by switching to all Direct Loans by 2010
- Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to low-cost federal college loans, in any economy.
- Provides students with low-cost federal college loans with the same interest rates, terms and conditions as loans made by lenders – and the peace of mind of knowing those loans will never disappear. Loans made through both the Direct Loan and the federally-guaranteed student loan programs carry an interest rate of 6.8 percent – a much more affordable interest rate than private loans carry. Under this legislation, federal student loan borrower will be able to borrow the same loans, at the same good rates as before – but these loans will be more cost-effective for taxpayers.
Ensure that all student borrowers can benefit from high-quality, state-of-the-art customer service when repaying their loans
- Upgrades the services all federal student loan borrowers receive. Rather than force private industry out of the system, the bill will forge a new public-private partnership that both maintains jobs and provides all borrowers with the highest-quality customer service when repaying their loans. It will establish a competitive bidding process that allows the U.S. Department of Education to select lenders based on how well they serve borrowers, provide financial literacy counseling, and prevent loan defaults. The legislation will also provide a role for non-profits to continue servicing student loans.
- Preserves servicing jobs in communities across the country. Between this new public-private partnership and the more than $500 billion in outstanding federally-guaranteed student loans that will still need to be serviced, there will be tremendous demand for workers to continue providing great service to Americans repaying their loans.
Streamline financial aid operations for colleges and universities
- College financial aid offices already have the infrastructure in place to administer Direct Loans. Schools will be able to operate these loans using the same on-site system currently used to administer Pell Grant scholarships; almost all schools participate in the program. Colleges and universities that have switched to Direct Loans, including those that converted in the midst of last year’s credit crisis, report that it was a fairly easy and inexpensive process. Currently about 1,700 schools participate in the Direct Loan program, including 500 colleges that switched in the past year alone. Under this bill about 4,500 colleges will need to switch to Direct Loans.
Just this week, President Obama set a new goal of graduating 5 million more Americans from community colleges by 2020. This legislation includes President Obama’s groundbreaking community college reforms that will help reach this goal and prepare students and workers for 21st century jobs by:
Creating a new Community College Challenge Grant Program that will transform community colleges into excellent education and job training centers
- Build a 21st century workforce by encouraging historic partnerships between community colleges, businesses, job training and adult education programs. The bill will create a new competitive grant program for community colleges to improved instruction, work with local employers, improve their student support services, and implement other innovative reforms that will lead to a college degree, certificate or industry-recognized credential to fulfill local workforce needs. The Secretary of Education will be able to evaluate the effectiveness of all programs and policies funded through these grants by using 2 percent of these funds to commission the Institute for Education Sciences to conduct a rigorous study to help the Secretary determine which reforms may be replicated at other colleges and states.
- Incentivize community colleges to achieve excellence by requiring them to meet benchmarks in order to participate in the challenge grant program. Under the program, the Secretaries of Education and Labor will award four-year grants to community colleges and other 2-year degree granting institutions on a competitive basis to support innovative pilot programs and policies. In order to continue to receive funding for year three of the grant period, community colleges must meet benchmarks they set in consultation with the Secretary of Education’s approval. Pilot programs and policies must also demonstrate that they can be replicated either in the state or nationwide. The minimum grant that can be awarded is $1 million. Funds can be used to carry at least two of the following activities:
- Facilitating transfer of credit articulation agreements;
- Expanding academic and training programs that provide relevant job-skill training for high-wage occupations in high-demand industries;
- Improving student support services including those identified under the Workforce Investment Act;
- Creating workforce programs that blend basic skills and occupational training leading to industry-recognized credentials;
- Building and enhancing linkages including dual enrollment programs and early college high schools as well as improving remedial and adult education programs; and
- Implementing reform programs to increase completion rates and provision of training for students to enter high-wage occupations in high-demand industries.
- Ensure that more students graduate with the expertise needed for high wage jobs and high-demand industries. Targets grants to high-need students and programs that focus on preparing students for jobs in fields that need workers and will continue to grow. The Secretaries would also be able to award six-year competitive grants to states to implement successful Challenge Grant Program reforms at other community and junior colleges within the state. Funding could be discontinued if the state does not make progress meeting benchmarks it develops with the Secretary by year three of the grant period.
Expanding access to education by supporting free, high-quality, online training, and high-school and college courses.
- The U.S. Department of Education would be authorized to make competitive grants available to eligible colleges, workforce programs or other entities to help support the development of these courses.
Ensuring that Americans can learn in modern, updated, and state-of-the-art community college facilities.
- Helps community colleges construct, renovate and repair their facilities by providing $2.5 billion, which will leverage additional funds, and ensures that funding is used for facilities that are primarily used for instruction, research, or student housing.
Nearly 12 million children under age 5 regularly spend time in child care arrangements and children with working mothers spend on average 36 hours per week in such settings. But currently there are no federal quality standards for child care and families are left with a patchwork system of child care with mediocre quality. Our children deserve and need better. By 4 years old, children from low-income families are already 18 months behind most other 4 year-olds. From the start, education reform should include early learning, or we miss out on 5 critical years. A comprehensive range of high quality early learning opportunities from birth through age 5 is necessary to give children what they will need to grow and succeed.
To ensure more kids reach kindergarten ready to succeed, the Student Aid and Fiscal Responsibility Act includes an Early Learning Challenge Fund to increase the number of low-income children in high quality early learning settings. Specifically, the legislation will:
Invest $1 billion each year in competitive grants to challenge states to build a comprehensive, high quality early learning system for children birth to age 5 that includes:
- Early learning standards reform.
- Evidence-based program quality standards.
- Enhanced program review and monitoring of program quality.
- Comprehensive professional development.
- Coordinated system for facilitating screenings for disability, health, and mental health needs.
- Improved support to parents.
- Process for assessing children’s school readiness.
- Use data to improve child outcomes.
Transform early learning programs by insisting upon real change in state standards and practices:
- Build an effective, qualified, and well-compensated early childhood workforce by supporting more effective providers with degrees in early education and providing sustained, intensive, classroom-focused professional development to improve the knowledge and skills of early childhood providers
- Best practices in the classroom by implementing research-based early learning standards aligned with academic content standards for grades K-3.
- Promote parent and family involvement by developing outreach strategies to parents to improve their understanding of their children’s development.
- Fund quality initiatives that improve instructional practices, programmatic practices, and classroom environment that promote school readiness.
- Quality standards reform that moves toward pre-service training requirements for early learning providers, and adopting best practices for teacher-child ratios and group size.
- Higher Pell Grant scholarship of $5,550 in 2010 and $6,900 in 2019.
About 6 million students received the Pell Grant scholarship in 2007-2008.
- Lower interest rates on need-based (subsidized) federal student loans.
Nationwide about 5.5 million students borrow these loans each year.
- More access to Perkins loan program by expanding it to every U.S. college campus.
Last year approximately 495,000 students received a Perkins Loan.
- Shorter, simpler FAFSA form that makes applying for financial aid easier.
In 2003-2004, over 1.5 million college students who likely were eligible to receive Pell Grants didn’t apply for financial aid because they found the FAFSA form too confusing.
Better Opportunities to Prepare for Good Jobs
- New college access and completion programs to help you stay in school and graduate.
- Innovative partnerships between colleges, businesses and job training programs to help you get the real-world experience and skills you need to be ready for the jobs of the future.
- Free, high-quality, online training and high school and college courses.
Financial Aid Programs That Are Worry-Free and Operate In Your Best Interest
- Gives you the peace of mind of knowing that your federal student loans are stable.
- Removes any potential for conflicts of interest between lenders and colleges.
- Guarantees you the best customer service available when you repay your student loans.
Modernizing school buildings will help revive our economy by creating jobs and preparing workers for the clean energy fields of the future. And by ensuring students can learn in modern, updated, renovated and safer environments, this legislation will help prepare future generations to compete in a 21st century global economy. Specifically, this legislation will:
Provide elementary and secondary schools and community colleges with access to funding for modernization, renovation and repair projects
- For K-12 schools:
- Authorizes more than $4 billion for elementary and secondary school facility projects over the next two fiscal years, and ensures that school districts will receive funds for school modernization, renovation, and repairs that create healthier, safer, and more energy-efficient teaching and learning climates.
- Allocates the same percentage of funds to school districts that they receive under Part A of Title I of the Elementary and Secondary Education Act, except that it guarantees each such district a minimum of $5,000.
- Provides grants to states to help community colleges finance new construction, modernization, renovation, and repair projects.
- Allows grant funds to be used to match private donations to a community college capital campaign.
For Community Colleges:
- Requires the majority of funds to be used for projects that meet green building standards. Allows states to reserve one percent of the elementary and secondary funding to administer the program, provide technical assistance, and to develop voluntary guidelines for high-performing school buildings.
- Increases transparency by requiring school districts to publicly report the types of modernization, renovation, and repairs completed as well as the educational, energy and environmental benefits of such projects.
- Brings innovative projects to scale by requiring the Secretary of Education, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, to disseminate best practices in school construction and to provide technical assistance to states and school districts.
Provide additional aid to Gulf Coast schools still recovering from Hurricanes Katrina and Rita
- Provides $60 million over two years for public elementary and secondary schools that were damaged by Hurricanes Katrina and Rita. Many students still attend school in temporary classrooms.
Ensure fair wages and benefits for workers by applying Davis-Bacon protections to all grants for instructional facility modernization, renovation, and repair projects
Here it is in its entirety:
Fix loan system for a stronger future
By: Rep. George Miller
This summer, millions of students will sit down with their families to figure out how to pay for college. They will unwittingly enter into a financial lending system that is badly broken — and not benefiting them as intended.
However, if Congress and President Barack Obama are successful, this system is about to undergo a major change.
The college financing system that was supposed to ensure all students access to college is dangerously out of control, for three reasons.
First, tuition has skyrocketed and shows no signs of abating.
Second, the roller-coaster credit markets have put the federally guaranteed student loan program, which for years has originated almost three-quarters of all federal college loans, on life support.
Not surprisingly, critics are using scare tactics to try to mislead the American public about this effort. They’re desperate to preserve the status quo – a system that for too long has favored banks at the expense of students and taxpayers.
"This program will provide much-needed relief to Illinois students and families who are already struggling in this tough economy," said U.S. Rep. Phil Hare, D-Rock Island, who approved the legislation. "We should be rewarding those who pursue a higher education, not crippling them with debt. When the best and the brightest students can afford to go to college, we all benefit."
Learn more about the College Cost Reduction and Access Act and read other blog posts highlighting the many benefits.
The Washington Post explains how this benefit works:
Under the Public Service Loan Forgiveness Program, the Obama administration announced yesterday [although this provision was enacted 2 years ago by Congress], people with student loans can have their debts erased after 10 years of public service. Let's say Dr. Feelgood graduates from medical school with a mountain of student loan debt. Her heart, and a little angel on one shoulder, tell her to work in a clinic serving a low-income community on tribal lands, but that little devil on her other shoulder says to become a plastic surgeon in Beverly Hills. And the little devil is holding her empty pocketbook as evidence to back his case.and the Daily Texan speaks to a student who will benefit from the new provision because she is entering public service.
If the doctor follows her heart and makes 120 payments -- one a month for 10 years -- on her student loan, Uncle Sam will tell her to forget the rest of the money she owes.
Elisheba Evans, a former UT English student who transferred to the University of North Texas, is paying off her UT-Austin student loans.Learn more about public service loan forgiveness (pdf) and read other blog posts on the benefits from the College Cost Reduction and Access Act.
She said the program’s forgiveness clause will benefit her in her career choice as a science teacher.
“It’s good that there is a system in place to reward people going into [public service] because you aren’t making that much at all,” Evans said.
These benefits were enacted as part of the College Cost Reduction and Access Act, a law I sponsored in 2007 that made historic investments to help more Americans earn a college degree. With the economy against this year’s college graduates, this relief couldn’t come at a better time.
“This help couldn’t be coming at a better time for borrowers in this tough economy, or for current and future students facing an escalating college affordability crisis,” said U.S. Rep. George Miller (D-CA), chair of the House Education and Labor Committee. “These benefits will make a serious difference for students and families working very hard to pay for college, and will provide millions of borrowers more flexibility in choosing a career they truly desire rather than one made necessary due to crippling student debt.”
“Under this new program, students no longer have to choose between serving their nation and communities and tackling a mountain of college debt,” explained U.S. Senator Edward M. Kennedy (D-MA). “Our nation is better and stronger when the best and brightest young Americans choose careers in public service.”
“These benefits are guaranteed, no matter what happens in our economy, and are kicking in at exactly the right time for millions of Americans,” said Representative George Miller, Democrat of California and chairman of the House education committee.
See Chairman Miller's complete statement here.
Source: IBRinfo.org
“Confusing paperwork shouldn’t stand between qualified students and a college degree,” said Rep. George Miller, a California Democrat who is chairman of the House Committee on Education and Labor. A law passed last year helped, creating a two-page form for some low-income families.
We encourage you to read the entire editorial and to learn from the Department of Education.
“Confusing paperwork shouldn’t stand between qualified students and a college degree. As families’ needs for college aid continue to grow in this economy, we have to ensure that students and parents can access an easy-to-navigate financial aid process designed to help them get the federal aid they are eligible for. Secretary Duncan has put forth commonsense proposals for streamlining the FAFSA, and Congress will examine how we can build on these steps as we work to make college more affordable by safeguarding and strengthening our federal student aid programs.”
But what if you have a job, but not a lot of income? Under the Income-Based Repayment plan (IBR) your payments are capped to no more than 15% of discretionary income, an amount that is based on the federal poverty guideline. "Discretionary income" is defined as the difference between adjusted gross income and 150 percent of the federal poverty line that corresponds to your family size and the state you live in (from www.finaid.org).
These new options apply to the Stafford, Grad Plus and federal consolidated loans and your loans must be in good standing. If you are unemployed, you can apply for a deferment of up to 3 years. Read the entire article and visit www.ibrinfo.org to learn more about the income-based repayment plan.
First, income-based repayment will only be available for federal student loans that are in good standing. Under this plan, borrowers' monthly payments will be capped at 15% of the amount by which their income exceeds the federal poverty level (currently $16,245).There are additional circumstances for married couples filing jointly, students in deferment, and medical students to consider. We encourage you to read the entire article (and use their cool income-based repayment calculator to see your potential monthly savings).
Let's say you have an adjusted gross income of $30,000. That means your pay exceeds the federal poverty level by $13,755 a year, or $1,146.25 a month. Under the new program, you would owe 15% of that amount, or $171.94, per month, regardless of your total outstanding loan balance.
If you left school owing $40,000 in federal loans, you would pay $460.32 a month under the standard 10-year plan. By choosing the income-based repayment plan, you would save 63% per month (by lengthening the life of the loan, however, you will end up paying more in interest over time.)
This is a system that goes something like this:We encourage you to learn more about the President's proposal, read the entire editorial and review the highlights from our recent hearing on this subject.
Are you with me so far? Wait, I see a hand waving back there. What’s that, sir? You want to know why the government doesn’t just lend the money out itself? Excellent question!
- We the taxpayers pay the banks to make loans to students.
- We the taxpayers then guarantee the loans so the banks won’t lose money if the students don’t pay.
- We the taxpayers then buy back the loans from the banks so they can make more loans to students, for which we will then pay them more rewards.
The White House estimates that it could save about $94 billion over 10 years if it cut out all the middlemen. And it has the basis of a system in place, since the Department of Education already makes a lot of direct loans to students.
In the last year, the crises in the credit markets and the economy have dramatically altered the student loan landscape, putting the federally-guaranteed student loan program that private lenders participate in on life support. As a result, the student loan programs aren’t working as effectively as they could be for students, families or taxpayers, witnesses explained.
“The status quo has become impossible to defend. Students and families are not being served as well as they could be and taxpayers are spending billions of dollars annually to finance a broken system,” said U.S. Rep. George Miller (D-CA), the chairman of the committee. “Momentum is building for reforms that will deliver aid to families in a more stable and sustainable way, shielded from any ups and downs in the markets. We can either continue sending billions of dollars to banks and lenders or we can start sending it to students who need more help than ever paying for college in this economy.”
One of the proposals the committee will examine is President Obama’s FY 2010 budget proposal, which would increase the Pell Grant scholarship and other forms of student aid by almost $100 billion over ten years – and at no cost to taxpayers. The President’s plan would be paid for by ending the subsidies the federal government currently pays to lenders in the federally-guaranteed student loan programs and re-directing those savings back into additional aid for low- and middle-income students
An article in Newsday recently declared that the “recession is pushing college out of reach.” That’s a sobering thought—particularly because a college education can be a key path to a stronger financial future for many Americans.
Current statistics on costs at local colleges and universities help explain why this is the case. At Stony Brook University on Long Island, the average debt incurred by 2007 graduates had increased by 9% over the previous year. That’s nearly three times the annual cost of living adjustment. Completing college in New York or any other state is an increasingly expensive proposition: the average student graduates with nearly $22,000 in debt. With the current economic downturn, a college degree may appear even further out of reach for many Americans.
As a former college administrator, I understand the importance of college affordability for American students. I am heartened by the steps that President Obama and my Congressional colleagues have taken to date, including the passage of the American Recovery and Reinvestment Act of 2009. This legislation includes billions of dollars to repair and construct school facilities and improve services for the children most in need, which will better prepare our next generation for the challenges of college and the globalized economy.
On July 1st, some new benefits for students will go into effect thanks to the College Cost Reduction and Access Act. On July 1, the interest rate on need-based federal student loans will be reduced to 5.6% down from the current 6% (rates will drop even further to 3.4% by 2011). The maximum Pell Grant scholarship will increase to $5,350 which will reduce the amount that students need to borrow in the first place. In addition, monthly loan payments may be capped at 15% of discretionary income, so student loans will become less of a burden on young people getting started in their careers.
Alex, a student on Long Island who will graduate with a whopping $70,000 in debt, puts it well: “Higher education shouldn’t come at the price of indebtedness for life.”
That’s a goal for our college graduates on which I hope we all can agree.
We can get there by increasing grant aid from all sources (federal, state, and institutional), making it less expensive for students and families to borrow, and working with institutions to implement best practices to hold down costs.
Starting July 1, there will be new help for recent grads -- or those who have been out of school for a while and are struggling to repay student loans. The new federal Income-Based Repayment program will allow those with low incomes to pay as little as zero on their student loans, as long as they qualify based on income and amount of debt.The rules are a little complicated, but you can visit www.IBRinfo.org. to use their online calculator to see if you are eligible.
Additional benefits that start on July 1 from the College Cost Reduction and Access Act include:
- increase in Pell Grants
- reduction in interest rates on federal loans from 6.0% to 5.6%
- TEACH grants for qualified undergraduate students who commit to teaching in public schools in high-poverty communities or high-need subject areas.
- Loan forgiveness after 10 years for public servants
On Wednesday, May 20, U.S. Education Secretary Arne Duncan will testify before the House Education and Labor Committee about President Obama’s agenda for transforming American education. This will mark Secretary’s first appearance on Capitol Hill to outline the President’s education goals.
On Thursday, May 21, the House Education and Labor Committee will hold a hearing to examine proposals that will make historic increases in college aid by enacting reforms that will make the nation’s federal student loan programs more reliable, effective and efficient for students, families and taxpayers.
One of the proposals the committee will examine is President Obama’s FY 2010 budget proposal, which would increase the Pell Grant scholarship and other forms of student aid by almost $100 billion over ten years – and at no cost to taxpayers. The President’s plan would be paid for by ending the subsidies the federal government currently pays to lenders in the federally-guaranteed student loan programs and re-directing those savings back into additional aid for low- and middle-income students.
One of the proposals the committee will examine is President Obama’s FY 2010 budget proposal, which would increase the Pell Grant scholarship and other forms of student aid by almost $100 billion over ten years – and at no cost to taxpayers. The President’s plan would be paid for by ending the subsidies the federal government currently pays to lenders in the federally-guaranteed student loan programs and re-directing those savings back into additional aid for low- and middle-income students.
WHAT:
Hearing on “Increasing Student Aid through Loan Reform”
WHO:
Witnesses TBA
WHEN:
Thursday, May 21, 2009
10:00 a.m. ET
Please check the Committee schedule for potential updates »
WHERE:
House Education and Labor Committee Hearing Room
2175 Rayburn House Office Building
Washington, D.C.
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.
This year’s class of graduating college seniors also enters one of the toughest jobs markets in decades for recent graduates. 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.
Given these challenges, it’s critical for current college students, new or soon-to-be graduates, and workers to know about new benefits that went into effect July 1, 2009 that will make student loan payments manageable for millions of Americans. (These benefits were signed into law in 2007 as part of the College Cost Reduction and Access Act.) They include:
“As we continue working to turn our economy around, we have to do everything we can to help the millions of Americans who have suffered job losses in this recession get the education, training and skills they need to return to the workforce. President Obama’s initiatives are commonsense steps that will make college and training programs more accessible and affordable for laid-off workers by allowing them to enroll in postsecondary education without forfeiting their unemployment benefits. In addition, it’s critical that he reminded financial aid officers that they can adjust financial aid packages based on recent layoffs, so families aren’t paying for college based on incomes they no longer earn.
Currently, people who are out of work and want to go back to school have to give up their monthly unemployment check. And if they decide to return to school, they often don't qualify for federal grants because eligibility is based upon the previous year's income.In addition to making it easier for those out of work to return for additional training, President Obama has been pushing for a transformation of the federal loan program to save taxpayers money and ensure stability for students. This USA Today editorial explains why this reform is important.
The student lending market is far smaller than the housing market. But it raises a similar question: Does it make sense for the government to pump its education dollars through banks — which divert some of the money for their own profits, wine and dine college financial aid officers to get on "preferred lender" lists, and lobby Washington to keep the spigot open?
The administration estimates it can save as much as $94 billion over 10 years by eliminating middlemen and lending directly. Even if that number is exaggerated, it reflects how inefficiently taxpayers' money is being spent. Banks shouldn't need major subsidies to issue guaranteed student loans.
To learn more about President Obama's proposal click here.
While Brennan’s situation, and the remedy he is pursuing, may sound extremely ambitious, guidance counselors across the country say they can recall no prior year in which so many applicants’ families have been squeezed by so many financial pressures.President Obama has put forth a solid plan to make federal student loans more reliable, while saving taxpayers billions of dollars. To learn about the President's proposal, click here.
Not only have families’ incomes been falling as their savings have dwindled, but also tuition has been rising — including proposed increases of nearly 10 percent next year throughout the University of California system....Interest rates on student loans, including on popular federal programs like the unsubsidized Stafford (now nearly 7 percent) and Parent Plus (8.5 percent), are running several percentage points higher than the rates on secured loans, like home equity lines of credit.
“The difference of rates between secured and unsecured loans is higher than I have ever seen,” said Scott White, director of counseling services at Westfield High School in New Jersey. “This is one further impediment to access to post-secondary education for all but the well-to-do.”
Will Congress pass Obama's student loan plan?
This proposal would not threaten private lenders' ability to make private loans to college students at unregulated (and often highly profitable) interest rates. It would simply allow the federal government to keep the profits from loans it already subsidizes, instead of handing them over to banks. It would improve efficiency and save money, and it should have been passed a long time ago.
And there is more at the San Francisco Chronicle and we encourage you to read the entire editorial.
To learn more about where Chairman Miller stands on this proposal, see his statement on President Obama's budget.
Private companies that reap undeserved profits from the federal student-loan program are gearing up to kill a White House plan that would get them off the dole and redirect the savings to federal scholarships for the needy. Instead of knuckling under to the powerful lending lobby, as it has so often done in the past, Congress needs to finally put the taxpayers’ interests first. That means embracing President Obama’s plan.
This builds upon Rep. Miller and the Education and Labor Committee's efforts in the 110th Congress.
We encourage you to read the entire editorial. And these from the Syracuse Post-Standard and the Albany Times Union.
CNN Money has an article about how specific provisions in the College Cost Reduction Act of 2007 can help recent graduates.
Under the College Cost Reduction and Access Act of 2007, two federal loan forgiveness programs could provide greater assistance to those who decide to pursue careers that serve the public. Income-Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF) could make student loan forgiveness much more accessible to the masses.We encourage you to read the entire article to learn more about the two provisions, as well as visit the Department of Labor's website for the IBR and PSLF provisions.
"Both of these programs are much more widely available than anything that's been available in the past," says Irons.
The budget rightly calls for phasing out the wasteful and all-too-corruptible portion of the student program that relies on private lenders. And it calls for expanding the less-expensive and more-efficient program that allows students to borrow directly from the federal government. That means doing away with the Federal Family Education Loan Program, under which private lenders receive unnecessary subsidies to make risk-free student loans that are guaranteed by taxpayers.
This builds upon Rep. Miller and the Education and Labor Committee's efforts in the 110th Congress.
We encourage you to read the entire editorial.
A well-trained, college-educated workforce is key to a strong American economy and middle class. The economic crisis, combined with rising tuition prices and declining state support for higher education, threatens to put college out of reach for many students – forcing them to take a semester off or even skip college. Allowing students to be priced out of a college education will only further weaken our workforce and our economy. Economists, the business community, scientists and others agree that making strategic investments in education is a smart move to grow our economy and regain our competitive edge in the 21st century global economy.
The American Recovery and Reinvestment Act will help college students and families pay for college by significantly boosting federal student aid. It builds on the groundwork laid by the 110th Congress to make college more affordable and accessible for all qualified students. The legislation will:
WASHINGTON D.C. – U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, issued the following statement today after U.S. Treasury Secretary Henry Paulson announced a new plan to bolster consumer lending, including student loans. The plan would allow investors to obtain a loan from the Federal Reserve, using student-loan and other asset-backed securities as collateral, potentially providing more funding to lenders to extend consumer credit.
A report released by the National Math Panel in March found that the nation’s system for teaching math is “broken and must be fixed” if the U.S. wants to maintain its competitive edge. In May, the Committee first examined the report’s findings and recommendations; this hearing follows up on that hearing.