Legislators approve largest student aid increase since 1944 G.I. Bill
In an attempt to ease the burden of rising college costs, both houses of the U.S. Congress passed the College Cost Reductions and Access Act, resolving differences between the Senate and House over the single biggest increase in federal student aid since the G.I. Bill. The bill is expected to be signed by President Bush within the week.
The Act attempts to address the costs of college through a number of mechanisms involved at both the front end of payment and the back end. These mechanisms include a mix of loan subsidies, increased grants, motivations for colleges to maintain reasonable cost increases and methods of loan forgiveness.
The Act fulfills one of the Democratic House's promises to the American people and not only meets, but surpasses Bush's requests for an increase in student aid made in the Address to the Nation in January. The bill passed the House of Representatives with bipartisan support resulting in a 292 to 97 vote and in the Senate by a 79 to 12 vote, despite opposition among Republican leadership in the House and much closer margins in the initial floor vote in July.
The College Cost Reductions and Access Act seeks to achieve its stated ends through two veins.
The first is by increasing access to aid and decreasing the costs for lower and middle income students when going to institutions of higher education. Part of this increase in student aid may be in effect by October and will offer $20 billion to financial aide over the next five years.
One of the key methods of improving access to student loans is by cutting interest rates on them. The current fixed interest rates on loans is 6.8 percent. The bill will cut the rate to 6 percent by July 2008 and then interest rates will steadily be reduced until 2011, when it will be 3.4 percent.
The bill will also increase the purchasing power of Pell grants. The Pell Grant issue was one of the major sticking points for Republicans earlier this year, when the bill passed both houses by much slimmer margins (273 votes for aye to 149 nays in the house and 9 Ayes against 12 nays in the Senate). Republicans preferred increasing Pell Grants rather than having the federal government increase involvement in the private loans sector. When the bill went back into committee and differences were resolved, Republicans and Democrats worked together to add a Pell Grant increase into the bill.
The Act attempts to address the costs of college through a number of mechanisms involved at both the front end of payment and the back end. These mechanisms include a mix of loan subsidies, increased grants, motivations for colleges to maintain reasonable cost increases and methods of loan forgiveness.
The Act fulfills one of the Democratic House's promises to the American people and not only meets, but surpasses Bush's requests for an increase in student aid made in the Address to the Nation in January. The bill passed the House of Representatives with bipartisan support resulting in a 292 to 97 vote and in the Senate by a 79 to 12 vote, despite opposition among Republican leadership in the House and much closer margins in the initial floor vote in July.
The College Cost Reductions and Access Act seeks to achieve its stated ends through two veins.
The first is by increasing access to aid and decreasing the costs for lower and middle income students when going to institutions of higher education. Part of this increase in student aid may be in effect by October and will offer $20 billion to financial aide over the next five years.
One of the key methods of improving access to student loans is by cutting interest rates on them. The current fixed interest rates on loans is 6.8 percent. The bill will cut the rate to 6 percent by July 2008 and then interest rates will steadily be reduced until 2011, when it will be 3.4 percent.
The bill will also increase the purchasing power of Pell grants. The Pell Grant issue was one of the major sticking points for Republicans earlier this year, when the bill passed both houses by much slimmer margins (273 votes for aye to 149 nays in the house and 9 Ayes against 12 nays in the Senate). Republicans preferred increasing Pell Grants rather than having the federal government increase involvement in the private loans sector. When the bill went back into committee and differences were resolved, Republicans and Democrats worked together to add a Pell Grant increase into the bill.
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