I wanted to make sure that you were aware that starting on July 1st, the interest rate on subsidized student loans was cut to 3.4% -- the last of four steps to cut this interest rate in half over four years. This rate cut was passed as a part of the 2007 College Cost Reduction and Access Act and was one of the first major bills considered after I came to Congress.
Due to these cuts, the typical student borrower who started college in 2008 will have saved $2,570 over the life of their loan.[1] Millions of students take out subsidized student loans each year. Under this Act, the interest rate on subsidized student loans has been cut as follows:
• On July 1, 2008, the interest rate was cut from 6.8% to 6.0%
• On July 1, 2009, the interest rate was cut from 6.0% to 5.6%
• On July 1, 2010, the interest rate was cut from 5.6% to 4.5%
• On July 1, 2011, the interest rate will be cut from 4.5% to 3.4%
I strongly supported this legislation because I believe that we need to make college more affordable and accessible for millions of American students. This is one of the most important things we can do to invest in our nation’s future and build a stronger middle class.
Also, on July 1, due to provisions in the 2008 Higher Education Opportunity Act, new college affordability information became available to young people and their families on the Department of Education website. This information will help prospective college students and their families shop for the best educational value based on their individual circumstances. This new information will provide students and their families early estimates of their expected college costs, and allow them to estimate the annual and total cost of a college education at the individual colleges or universities they are interested in. Also available will be information on incentives for attendance, such as need-based aid, that individual colleges and universities may be offering.
During my time in Congress, there have been a number of additional measures passed to make college more affordable, including the following:
• Increasing Maximum Pell Grant. Between 2007 and 2010, the Democratic-led Congress increased the maximum Pell Grant from $4,050 to $5,550 (after GOP-led Congresses had frozen the maximum Pell Grant for four years, despite the rapidly rising cost of colleges). Increasing Pell Grants has been a critical component of Democrats’ agenda to make college more affordable for millions of America’s young people. Currently, there are about 9 million students receiving a Pell Grant to help pay for the costs of college.
• Income-Based Repayment Program. Beginning on July 1, 2009, student loan payments were made more manageable by guaranteeing that student borrowers will not have to pay more than 15 percent of their discretionary income in loan repayments.
• Public Service Loan Forgiveness. The Public Service Loan Forgiveness Program, which I authored, began on October 1, 2007, under which graduates who enter into public service careers, such as teachers, public defenders, firefighters, nurses, non-profit workers and more, are eligible for complete loan forgiveness after 10 years of qualifying public service and loan repayments.
I hope you find this information helpful.
