No New Cost to Taxpayers

The College Cost Reduction and Access Act of 2007 will benefit students and families at no new cost to taxpayers, by cutting excess subsidies paid by the federal government to lenders in the student loan industry.  Four of the six offsets were already approved by the House this year, when it overwhelmingly voted to pass the College Student Relief Act of 2007 (H.R. 5) in January.

In the past few years, student lenders have greatly increased their efficiencies through market-driven mechanisms; however, the government operation and subsidization of the programs have not changed.  This imbalance has resulted in greater profits for lenders rather than decreased costs for the taxpayers.

Under the College Cost Reduction and Access Act, lenders will still yield a profit, and all savings will be returned to students with reduced interest rates on loans, increased grant aid, and lower college costs.   

• Furthermore, recognizing the unique mission of non-profit lenders, putting all their profits back into students, the Act provides for additional assistance, providing a signifcant boost to their bottom line.
• ALL students can benefit from efficiencies achieved in the federal student loan program. 
• Students will continue to have lender choice, with more than 3,000 lenders in the program and a mandate under current law that the state-designated guaranty agency will provide a loan to any student who is unable to receive a loan from a lender.