Schumer: New Proposals Pose Triple Threat to Upstate College Students: Gutting Loans, Freezing Grants, & Hiking Interest Rates Could Mean Over .....
SCHUMER: NEW PROPOSALS POSE TRIPLE THREAT TO UPSTATE COLLEGE STUDENTS: GUTTING LOANS, FREEZING GRANTS, & HIKING INTEREST RATES COULD MEAN OVER $1,500 HIKE FOR AVG STUDENT
In Recently-Passed Budget Bill, Student Loans Interest Rates and Fees Increased While Subsidies Reduced
Schumer Study Shows New Budget Proposals to Eliminate Perkins Loans, Freeze Pell Grants Would Have Dramatic Impact on Upstate New York's College Students - Senator Pledges To Prevent Largest Cuts In Higher Education Ever From Becoming Law
Schumer to Release Perkins Loans Recipients In Each Region; 5,820 Students Depend on Perkins Loans in Capital Region; 5,666 In Central NY; 8,239 Rochester/Finger Lakes; 5,421 in Hudson Valley; 1,445 in North Country; 8,827 in Southern Tier; 6,610 in Western NY
With over one million college students in New York, U.S. Senator Charles Schumer, today detailed the impact of the largest cuts ever in higher education and announced a bipartisan effort to restore all federal funding. Schumer revealed how the current budget proposal eliminates Perkins Loans and freezes the maximum Pell grant at $4,050 - all on top of the cuts in the recently passed Budget Reconciliation bill, which hikes some interest rates by up to 2.4% over current levels.
"These are the largest cuts to higher education in our history," Schumer said. "As tuition continues to skyrocket out of control, we should be helping families afford college, not making it harder. These changes will place college out of reach for more and more New Yorkers. That's why we're going to fight tooth and nail to protect the grants and loans which are not only make college affordable, they make it accessible."
Tuition and fees increased in 2005-06 at an average rate of 7.1% for public institutions and 5.9% at private four-year colleges. Increased tuition at both private and public colleges and universities has resulted in college costs becoming increasingly unaffordable, and thus has caused an increased reliance on loans and other forms of student aid. As the federal government slashes student loans, the amplified reliance on student aid is poorly timed.
Student Loan Interest Rates Hike
In last year's Budget Reconciliation Bill, which passed February 2nd, student loans became even more difficult to repay. The bill slashed student loan programs by $12.7 billion for the next five years, and increased interest rates on college loans for both students and their families. Specifically, the bill sets a fixed interest rate for Stafford loans at 6.5%, a hike from the current variable interest rates of 4.7% for current college students and 5.3% for graduates. The fixed 6.5% interest rate for new Stafford loans will go into effect on July 1, 2006. This interest rate hike will affect over 9 million borrowers nationwide.
Additionally, the bill increases the interest rate for the Parent Loans for Undergraduate Student (PLUS) program to 8.5%, a 2.4% spike from the current rate of 6.1 percent. Today there are 888,000 outstanding PLUS loans nationwide, providing an average loan of $9,416. Federal education loans are an important contributor to college affordability --providing 47 percent of student aid. With the increased interest rates for federal loans mandated by the Budget Reconciliation, more students will turn to less flexible, private student loans, and even more devastatingly, will choose not to go to college.
Freezing Pell Grants
For more than thirty years, Federal Pell grants have served as the foundation for undergraduate student aid. Unlike student loans, Pell grants do not have to be repaid, and students may use their grants at any one of approximately 6,000 participating postsecondary institutions. In the 2004-2005 school year, Pell grants served 5.3 million students nationwide and 380,000 students in New York State. Pell grant eligibility and the grant amount awarded depend on family income, the cost of attending the institution, whether the student attends full-time or part-time, and whether the student attends for a full academic year or less. For the 2004-2005 school year, the highest household income eligible for Pell grants was about $70,000, but approximately 90% of Pell grant recipients come from household incomes of $35,000 or less.
In the 2005-2006 academic year, average tuition and fees at a public college increased 7.1% from the 2004-2005 academic year, tuition and fees were 7.1% higher than the year before at the average public college, and 5.9% higher at the average private college. Pell grant maximums, however, have not increased to reflect the increasing cost of tuition since the 2002-2003 academic year. In the Fiscal Year 2007 budget, the Administration proposes to keep the maximum Pell grant level at $4,050 for the fifth year in a row.
Eliminating Perkins Loans
Perkins loans provide a unique opportunity for both undergraduate and graduate students to obtain a low-interest loan through their educational institutions. Depending on when a student applies, his level of need, and the funding level of the school, a student can borrow up to $4,000 for each year of undergraduate study (up to $20,000 total) and $6,000 for each year of graduate or professional study (up to $40,000 total). The interest rates for these loans are set at a low 5%, graduates have up to ten years to repay the loans, and the loans can be forgiven if a graduate chooses a public service profession such as nursing or law enforcement.
The budget proposal not only eliminates all federal contributions to the Perkins Loans programs, it also rescinds the $7 billion the federal government has given to educational institutions to provide Perkins Loans, canceling all future forgiveness programs. Cutting Perkins loans would leave 62,000 New York students without this critical part of student aid.
Schumer today released a school-by-school breakdown of Upstate New York recipients of Pell Grants and Perkins Loans for a total of over176,000, and 42,000 respectively statewide:
5,820 students at Capital Region colleges took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 17,124 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
5,666 students at Central New York colleges took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 20,614 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
5,420 students at Hudson Valley colleges and universities took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 35,695 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
8,239 students at Rochester/Finger Lakes colleges took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 36,961 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
1,445 students at North Country colleges took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 14,067 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
8827 students at Southern Tier colleges took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 21,852 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
6,610 students at Western New York colleges took out Perkins loans that would be eliminated under the FY 2007 Administration budget proposal. 29,690 students received Pell grants that would be frozen at $4,050 per year despite the rapidly escalating cost of college tuition.
In response, Senator Schumer announced today that he, as part of a bipartisan coalition, will launch efforts to restore funding to these vital education programs. As the Senate Budget Committee prepares to draft its response to the President's budget and lay out a roadmap for the Senate's Appropriations bills, Schumer sent a letter to the Committee Chairman urging him to restore funding to the Pell Grant and Perkins Loan Programs. If Schumer's efforts are unsuccessful, he will partner with his colleagues once more to submit an amendment to the Senate Budget Resolution that would restore funding to the programs. Such an amendment passed the Senate last year by a vote of 51-49, successfully averting dangerous budget cuts for Fiscal Year 2006. Specifically, last year Schumer worked with Senators Edward Kennedy (D-MA), Susan Collins (R-ME) and others to prevent the elimination of the Perkins Loans program, and restored other funding for higher education assistance. This year, Schumer plans a similar effort, especially in light of the hike on student loan interest rates.
http://schumer.senate.gov/SchumerWebsite/pressroom/press_releases/2006/PR64.Student%20Loans.021506.html