Pell to Get $1,000 Increase
Moving swiftly today, the Senate (79-12) and House (292-97) gave final approval to legislation that will cut lender subsidies by $20 billion over the next five years, and transfer it to students. The majority of the money ($11.4 billion) will be directed to the Pell Grant program. This will make a $5,400 Pell Grant possible in five years. (The Pell Grant maximum will rise $500 next year).
President Bush withdrew his veto threat yesterday, and is now expected to sign the legislation.
The legislation also allows borrowers to cap monthly loan payments at 15 percent of income; provides loan forgiveness for long-term public service, or employment at 501(c)(3) organizations; makes modest cuts to the student loan interest rate; and makes improvements to the federal student aid application form by reducing the number of data elements required.
No one knows the effects of the student loan cuts on the private sector. The $20 billion in cuts comes on top of reductions last year of similar magnitude. Among the most controversial aspects of the lender cuts is the requirement that PLUS loan rates to be set through a system of state-by-state auctions. PLUS loans are essential to families at private colleges. NAICU will be watching this effort closely to ensure that the new system does not hurt the availability of program capital.
The bill that passed today only covers the part of HEA reauthorization that deals with mandatory spending. The Senate is pressuring the House to begin and then complete work this fall on a second HEA bill that would address the remaining issues, including college cost, accreditation, transfer of credit, and student learning outcomes. The Senate passed its version of the bill in July. The House would need to act quickly for such a large bill to get from committee to conference before Congress adjourns.
The detailed roll call votes On the bill passed Friday, September 7, are available on the Senate and House Web sites.
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Sarah Flanagan