Columns
Monday, August 27, 2007
helping iowa families afford college
There is good news for thousands of young Iowans heading to college this fall. Recognizing that college degrees are more important than ever to maintaining our competitive edge, Congress is taking much needed action to make higher education more affordable for Iowa families.
In recent years, rapidly rising tuition costs have made college a distant dream for many Americans. Millions more who are fortunate enough to attend college graduate with two things: a diploma and a mountain of debt.
Over the last six years, college costs have skyrocketed 40 percent. Meanwhile, the real value of federal grant aid has fallen, and too many young students are being forced to turn to private loans with high interest rates. Currently, Iowa students at four year colleges and universities graduate with an average of $22,727 in debt – the second highest rate in the country.
Recently, the Senate passed an urgently important bill to reverse these negative trends called the College Cost Reduction Act. This bill:
-- Will increase the maximum Pell Grant for low-income students to $5,100 next year and $5,400 by 2011 (up from $4,310 today).
-- Will encourage public service by providing loan forgiveness for raduates who go into fields like teaching, social work, and service as legal-aid lawyers.
The Senate also passed a related bill that will crack down on abuses and excesses in the private student loan industry. Recent reports show that some in the student loan industry have made improper financial agreements with educational institutions in return for being designated as a “preferred lender.” These “preferred lenders” often attract a large majority of students’ business, even though they may not offer students the best deal. This bill stops lenders’ from bribing colleges to improve their bottom line and enacts long-needed reforms to the student loan industry so it values students over profit.
These legislative initiatives create a win-win-win situation for the government, for students, and for taxpayers. The College Cost Reduction Act cuts wasteful, excessive subsidies to the private loan program by $18 billion and channels most of those savings into Pell Grants. The great advantage of Pell Grants is that they are grants. They do not have to be repaid; and they don’t burden low-income students with debt after graduation.
In Iowa, two decades ago the maximum Pell Grant covered 61 percent of the average cost of four-year public college tuition, fees, room and board. Today – even with a $260 increase I sponsored earlier this year – the maximum Pell Grant covers only a third of those costs. This new major increase in Pell Grants included in the College Cost Reduction Act will provide much-needed relief by bringing $36 million in additional grant aid to Iowa students and families next year.
When students graduate from college with high debt, it restricts their career choices, making pursuing public-service careers as teachers, social workers, or legal-aid attorneys seem financially impossible. That’s why I included a provision in this bill that established a loan repayment program for new law graduates who work in legal aid, representing low-income people in the court system. This will make it easier for legal aid programs to attract and retain qualified lawyers that can help provide all Americans with equal access to justice.
By reforming the student loan industry and ensuring more students have the resources they need to pursue higher education, Congress is investing in one of America’s most valuable resources: Our next generation of leaders.
