Results tagged “pell grants” from EdLabor Journal

The Wall Street Journal writes today about the new rules for student loans. 

Some parents and students may also see lower interest rates on new loans. Now that all Parent PLUS loans are under the Direct Loan Program, the fixed rate for new Parent PLUS loans is 7.9%. Some lenders had charged 8.5%.

And the fixed rate has dropped, to 4.5% from 5.6%, for new subsidized Stafford loans for undergraduates. With subsidized loans, the federal government pays the interest on a loan while the student is in school, during the grace period after graduation or if the loan is in deferment, which is when borrowers are temporarily allowed to stop making payments.

The Department of Education also has increased the maximum Federal Pell Grant award to $5,550 for the 2010-2011 academic year, from $5,350 for the 2009-2010 school year.

As Investopedia pointed out, the reforms eliminate the middleman, enlarge Pell Grants, increase funding for minority-serving institutions, lower income-based payments, and offer more forgiveness opportunities.

Learn more about how reforms to federal student loans help students, families and taxpayers.

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:

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.

An op-ed by Gail Collins in today's New York Times discusses the need to reform student loans. After looking at the private loan sector, she then turns to the federally-guaranteed loans:

This is a system that goes something like this:

• 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.

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!

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.

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.

In today's Chicago Sun-Times, Terry Savage's Savage Truth column brings great news for recent college graduates.

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

We encourage you to read Ms. Savage's entire column and visiting our page on the College Cost Reduction and Access Act for more information.

In today's paper, the New York Times has an article about the difficulty of paying for college. It follows Brennan Jackson, an A-student who ranks near the top of his high school class, as he tries to raise the $25,000 he still needs for his freshman year at the University of California, Berkeley, by stitching together a quilt of merit scholarships.

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.

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.”

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.