Higher education is becoming more and more important to success in our economy, yet is becoming less and less affordable and accessible. Democrats recognize that students and their families are struggling to cover the rising cost of college and have made college affordability a top priority. That is why under Democratic leadership, the Senate overwhelmingly passed two measures to make college more affordable and accessible for students and families: the Higher Education Access Act of 2007 and the Higher Education Amendments of 2007. These two bills will increase access to higher education, and direct our scarce federal dollars where they are most needed to students. Specifically, the legislation will:
· Increase Student Aid for Low- and Middle-Income Students. This legislation will provide a $17 billion increase in funding for college aid – the largest increase since the G.I. bill. The federal Pell Grant program has proven to be indispensable for millions of students who might not otherwise have had the financial resources to pursue a college degree. But the maximum Pell Grant award has not kept pace with the rising cost of college. While twenty years ago, the maximum Pell Grant covered 51 percent of the cost of tuition, fees, room and board at a public four-year college, it covered only about one-third of those costs in the 2005-2006 academic year. (Analysis of Department of Education data) The higher education package just approved by the Senate will raise the maximum Pell Grant to $5,100 next year, and to $5,400 by 2011 – an increase of more than 25 percent over the next four years. Attached to this Fact Sheet is a chart showing the amount of additional grant aid that each state will receive.
· Help Make Student Loan Debt More Manageable. More than 60 percent of undergraduates at four-year colleges have to take out loans, and the average amount of federal student loan debt upon graduation has increased from $7,663 in 1992-1993 to $17,400 in 2003-2004. When private loans are factored in as well, average student loan debt in 2003-2004 was more than $19,000. (National Postsecondary Student Aid Study 1993 and 2004, National Center for Education Statistics) These increased debt burdens are affecting graduates’ career and personal decisions. The Higher Education Access Act will help students better manage their loan payments by capping monthly federal student loan payments at 15 percent of a borrower’s discretionary income.
· Forgive Student Loan Debt for Those Who Commit to Public Service. Student loan debt can deter some graduates from pursuing public service careers such as teaching and social work. Pursuing these modestly paid but essential careers would leave some graduates with an unmanageable level of student debt. (State PIRGs’ Higher Education Project, April 2006) The higher education package approved by the Senate will help graduates manage their debt and encourage public service by providing loan forgiveness for borrowers who work in public service careers such as nursing, teaching, or law enforcement for 10 years.
· Hold Colleges and States Accountable for Rising Costs. While the importance of a college education has grown, so too has the cost. The cost of attending a public four-year college increased 40 percent between the 2000-2001 and 2005-2006 school years. The cost of attending a private four-year private college has also risen considerably – by 21 percent – and has reached nearly $26,500 a year. (U.S. Department of Education, Digest of Education Statistics, 2001 and 2006) By creating a national “watch list” of colleges whose costs are increasing at a rate higher than their peers, as well as providing more complete and objective information to parents and students on college costs, this legislation will ask colleges and states to do their part to help keep the costs of college down.
· Simplify the Financial Aid Process. The Free Application for Federal Student Aid (FAFSA) form is currently 10 pages long and often serves a barrier to low-and middle-income students applying for the aid they need in order to attend college. The Senate-passed legislation will simplify the FAFSA by creating a new 2-page EZ-FAFSA for low-income students, and phasing out the existing FAFSA for all applicants within five years.
· Reform the Student Loan System So It Works for Students, Not Banks. While students struggle to pay off their loans, the lenders who offer the loans are making huge sums of money. The federal government still pays large subsidies to lenders who participate in the federal student loan program — a relic from the program’s inception forty years ago when it was believed that incentives were needed to encourage lenders to take part in the program. Moreover, recent investigations have shown that lenders, and even some institutions’ financial aid officers, have been exploiting the student loan system, to the detriment of the very students they are supposed to be helping.
· The higher education legislation approved by the Senate provides benefits to students at no cost to taxpayers by reducing excessive lender subsidies and redirecting federal aid to students who need it most. In response to the corruption uncovered by recent investigations, the legislation will also:
· Ensure that colleges are recommending lenders based on the best interest of students, not the self-interest of financial aid officers;
· Prohibit payments, gifts, and other inducements from lenders to colleges and financial aid administrators that create conflicts of interest; and
· Require colleges to establish and follow a code of conduct with respect to student loans.