Results tagged “higher education” from EdLabor Journal

New Benefits on July 1st: What Every Borrower Should Know

The cost of paying for college has become a heavy burden for many Americans. Young people and adults across country are pursuing higher education in record rates, but even as the economy recovers, American families are still struggling to pay tuition bills. The cost of college, moreover, continued to rise during the economic downturn and currently shows no sign of slowing.

Given these challenges, it’s critical for current college students, new or soon-to-be graduates, and workers to know about new benefits that go into effect July 1, 2010 to make student loan payments manageable for millions of Americans. From eliminating wasteful subsidies to private bankers and switching to a system of direct lending of federal student loans to increasing the maximum Pell Grant scholarship, to reducing the monthly payment borrowers must pay back on their loans, this Democratic Congress has made historic investments in our economic future – all at no cost to taxpayers.

Specifically, borrowers will see the following changes go into effect:

(This is a guest blog post by Rep. Dina Titus, Education and Labor Committee Member.)

One of my top priorities in Congress is making higher education more affordable.  Especially in this difficult economic climate, when competition for jobs has increased at the same time that many students’ ability to pay for college has decreased, it is important for the federal government to make smart investments in our students.  These investments will make our young people – and our economy – more competitive in the global marketplace. That is why I am proud to be a member of the House Education and Labor Committee, where I have the opportunity to advocate for students in Southern Nevada and across the country.  The Education and Labor Committee and Congress have done tremendous work over the last few years in making a higher education more affordable and accessible to students than ever before, and this summer we will see some of the effects of those changes.

For example, starting today, students will see lower interest rates on their student loans, down to 4.5% from 5.6%.  This change will result in substantial savings for students over the life of their loan.  For 2010 we have raised the maximum annual Pell Grant scholarship to $5,550; the maximum Pell Grant will continue to increase in the years to come, up to $5,975 by 2017.  And this summer all new federal student lending will be converted to the effective and cost-efficient Direct Loan program.  Instead of providing banks with taxpayer subsidies, students will receive loans directly from the government, saving taxpayers $61 billion.

Chairman George Miller is featured today in Politico’s video series called the “The Politics of America’s Youth” with Mike Allen. He discusses ESEA reauthorization, higher education, and the bipartisan spirit and support for education reform.

Watch the three part video here.

On ESEA Reauthorization:

"We now have the opportunity to really take that rigid system and make a trade-in, if you will, of some additional flexibility at the local level for outcomes, for results. The Secretary [of Education] has made that clear, the President has made that clear, and I think we've made that clear in the series of hearings that we have held. We'd really like now to put more emphasis on better teachers, more emphasis on better leadership, more emphasis on the use of those resources and the flexible use of those resources, and really put teaching and learning and leadership back into the classroom, back into the local systems, and then stand back and hold them accountable for those--for those results, and we're getting a lot of encouragement as we've held our hearings."

On Higher Education:

"And what we tried to address ... was to see whether or not we could bring down the cost of college for families with an increase in the Pell Grant, by lowering the interest rates on student loans over the next couple of years, and then make it easier for the students and the families to manage that debt that they're required to take out to get the degree that they desire. And one of the ways we do that is we have--we let them have an income determinant payment system. How much you pay every month depends upon how much you're making. So, if you start a career with a low entry wage, you can still have that career and you can manage your payments.

"If you go into public service or you work for a non-profit, if you want to become a nurse, a doctor, a teacher, a prosecutor, a public defender and you're working for a public agency, in ten years, your loans go away, and you never have to pay more than 10--10 percent of your discretionary income to pay that loan back. All of a sudden, people can envision careers that otherwise they couldn't have, where they may really wanted to be a teacher, to be a health nurse, to be a physician's assistant, but they couldn't see how they could balance the pay and the education. We need those people, and so this is really in the public interest.

"We also--when we moved to the direct loan programs, it required the companies bring jobs back to America because they're now managing federal assets when they manage the repayment of these loans, and that requires people--that it be done here in America."

On Bipartisanship:

"There is--clearly, whether you're a Democrat or a Republican, you have a big interest in children. It's about our children, our neighbor's children, our constituents' children, it's about the country, and that passion is on both sides of the aisle, certainly in our Committee."

Today, the Project on Student Debt released a report, “Student Debt and the Class of 2008,” providing state-by-state data on the amount of debt college students amassed. Overall, it found that "student debt continued to rise even as it got harder for recent graduates to find jobs, and that debt levels vary considerably from state to state and college to college. Nationwide, average debt for graduating seniors with loans rose from $18,650 in 2004 to $23,200 in 2008, or about six percent per year. State averages for debt at graduation in 2008 ranged from highs near $30,000 to a low of $13,000. High-debt states are concentrated in the Northeast, while low-debt states are mostly in the West. At the college level, average debt varied even more, from $5,000 to $106,000. Colleges with higher tuition tend to have higher average debt, but there are many examples of high tuition and low average debt, and vice versa."

As Committee Member, Dina Titus of Nevada, says, “A higher education is vital to the future success of our nation’s young adults, and in order to attract good jobs of tomorrow to Nevada, we must have an educated workforce that is prepared to get the job done. The actions the House has taken this year will go a long way toward lowering the cost of college and reducing the burden on our students and their families.”

So far this year, the House of Representatives has taken a number of steps to bring down the cost of a college education and reduce the amount of debt students and their families face. In September, the House passed the single largest investment in aid to help students and families pay for college. The Student Aid and Fiscal Responsibility Act reforms the federal student loan system, saving taxpayers $87 billion. Of that savings, $10 billion goes toward deficit reduction and $77 billion goes toward making college more affordable through investments in Pell Grants, college access and completion support programs, and community colleges.

On July 1, a number of new benefits took effect to make college more affordable. Interest rates on subsidized federal student loans decreased from 6 percent to 5.6 percent. This was the second of four annual cuts to this rate, and it will continue to drop until it reaches 3.4 percent in 2011. Under the Income-Based Repayment program, borrowers’ monthly loan payments can be capped at 15 percent of their discretionary income.

Finally, as part of the American Recovery and Reinvestment Act passed by Congress in February, the maximum Pell Grant Award was increased by $500 to $5,350 for 2009-2010 and to $5,550 for 2010-2011.

CNN highlights a report (PDF) by The Project on Student Debt that found "an increasing number of college students are turning to private loans -- one of the riskiest ways to pay for schooling." Additionally, "of those who borrowed privately, [they] did not take full advantage of what it called safer and more affordable federal loans."

Private loans are often riskier because they have variable interest rates and cannot be discharged via bankruptcy. Nor are they eligible for payment deferments, loan forgiveness programs or income-based repayment options, like those that began on July 1, 2009.

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 would do just that:

• Invests $40 billion to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2011, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent.
• Strengthens the Perkins Loan program, a campus-based program that provides low-cost federal loans to students, by providing the program with more reliable forms of credit from the federal government and expanding the program to include significantly more college campuses.
• Keeps interest rates low on need-based – or subsidized – federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012.
• 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 all federal student loan borrowers with upgraded, modern, state-of-the-art customer service. Rather than force private industry out of the system, the bill will forge a new public-private partnership that provides all borrowers with the highest-quality customer service when repaying their loans and maintains jobs. 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, educate them financially, and prevent loan defaults. It will provide a role for non-profits to continue servicing student loans.

We encourage you to learn more about the Student Aid and Fiscal Responsibility Act, read CNN's article and The Project on Student Debt's report (PDF).

In today's News of the Day, the San Francisco Chronicle has an editorial about the importance for reform in the student loan industry. They say "one of the most sensible proposals in President Obama's budget would end federal subsidies for private lenders in favor of direct government loans."  And they take on several of the complaints about President Obama's proposal. For instance,

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.

The New York Times published an editorial this morning entitled Helping Students, Not Lenders. They highlight President Obama's efforts to save taxpayers $47.5 billion over ten years and make loans more dependable for students.

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.

In December 2006, Rep. George Miller, the new Chairman of the House Education and Labor Committee, announced that the Committee would be dedicated to the mission of strengthening America’s middle class. And over the past two years, the Committee has delivered on its promise. America's students, workers, and families need help more than ever during the current financial crisis, and the Committee will continue its work to strengthen the middle class. Below is an overview of the Committee’s legislative milestones in the 110th Congress.

In the past few weeks, the Committee has been hard at work pushing forward many key education measures.