New York Times.
The College Cost Reduction and Access Act will help address the dual financial challenges of access and affordability facing students. The legislation will:
- Increase the maximum Pell Grant award by $490 in each of the next two school years, by $690 in the following two school years and by $1,090 in each additional year. The Pell Grant is the nation’s premier college access program, providing grants to 5 million low-income students each year. The maximum Pell Grant is currently $4,310. (This would make it $6,670 by 2010 by my count).
- Create an Income Based Repayment program that allows borrowers to repay their loans as percentage of their income. Borrowers would be expected to pay 15% of any income above 150% of the poverty line (about $15,000 for a single individual). This new program will protect borrowers with low salaries from making unmanageable payments.
- Reduce interest rates on student loans for more than 5 million low and middle-income student borrowers receiving subsidized Stafford loans. To see who would benefit from these interest rate reductions read U.S. PIRG’s report.
- Finance increased education spending by reducing subsidies to student lenders. Lenders will receive a reduced rate of return for offering federal student loans and a slightly reduced reinsurance rate from the federal government. As a result, the increased grant aid and loan benefits will have no additional cost to taxpayers.