A bill now on President Bush’s desk would halve the interest rate on federal student loans and make more grant money available to students in low-income families.
The College Cost Reduction and Access Act would trim the interest rate on federal Stafford loans incrementally from 6.8 percent to 3.4 percent by July 2011.
That would be especially beneficial to students in Niagara and Erie counties, where 80 and 76 percent, respectively, of enrolled four-year college students will graduate college with debt averaging more than $17,000, said Sen. Charles Schumer, D-N.Y.
“In upstate New York, we know the old-time jobs that have been handed down from generation to generation are gone,” he said during a conference call Wednesday. “New jobs are available, but they require a higher education.”
The rate reduction would save the average upstate New York borrower $2,400 over the life of a four-year loan, according to an analysis released by Schumer’s office. This could help off-set a trend in which the cost of attending a public state school increased 24 percent from 1999-2000 to 2004-05 in New York, the analysis said.
“This is so, so important because these days, going to college can determine a young person’s fortune, but it shouldn’t cost one,” Schumer said.
In addition to trimming interest rates, the bill would increase funding for the Pell grant program from $840 million to $2.6 billion by 2017. The maximum Pell grant, which goes to students in low-income families, would increase by about $1,100 to $5,400 by 2012, while students would be eligible to receive two Pell grants per year by 2009.
These initiatives would be paid for in part by cutting close to $20 billion in subsidies to private student loan providers.
“We gave that money to the students, where it belongs.” Sen. Edward Kennedy, D-Mass., said in a release.
Another bill under consideration would provide relief to people already repaying loans, Schumer said. That legislation would allow unlimited consolidations of federal loans at lower interest rates; current rules restrict borrowers to one consolidation.
After initially indicating a veto of the bill, Schumer is confident that Bush will soon sign it into law. If so, it will take effect Oct. 1.
The Senate passed the bill 79-12, while the House of Representatives passed it 292-97.
Local News
EDUCATION: Bill would boost college funds
Interest rate reduction, increase in grant money among legislation’s highlights
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