Van Hollen Announces New Program to Make College More Affordable
Press Release
Van Hollen Announces New Program to Make College More Affordable
New Benefits Will Make Federal Student Loan Payments More Manageable to Repay
Today, new benefits will take effect that will make college more accessible and affordable for millions of Americans. The benefits are all kicking in as part of the College Cost Reduction and Access Act, which Congressman Van Hollen helped enact in 2007 under the new Democratic Congress. The legislation invested $20 billion in college assistance for families, at no additional cost to taxpayers. It is the single largest investment to help Americans pay for college since the GI Bill.
"All Americans deserve access to an affordable college education, but during these economic times that is becoming increasingly difficult. While families are losing income, benefits, and jobs, college tuition prices continue to rise. Too many young people are forced to forgo the dream of college, and those who must take out student loans are often saddled with debt for decades," said Van Hollen. "This new program will help make college more affordable, and help graduates manage their federal student loan payments. It is part of our continued effort to ensure every American who wants to continue their education is able to do so."
The new benefits include:
Cheaper interest rates on need-based (subsidized) federal student loans. On July 1, the interest rates on new subsidized federal student loans will decrease from 6 percent to 5.6 percent. This is the second of four annual cuts in this interest rate; it will continue to drop until it reaches 3.4 percent in 2011.
Reasonable and affordable monthly college loan payments for borrowers. A new Income-Based Repayment program will go into effect that caps borrowers' monthly loan payments at just 15 percent of their discretionary income. Any current or future borrower whose loan payment exceeds 15 percent of their discretionary income is eligible.
Higher Pell Grant scholarships that cover the average tuition at public universities. Due to funding provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act, the maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350 - more than $600 above last year's award.
In addition, students and borrowers will be able to continue to take advantage of other recent programs enacted under the law. To encourage more students to become teachers, the law provides up-front tuition assistance, known as TEACH Grants, of $4,000 a year - for a maximum of $16,000 - to students who commit to teaching high need subject areas in high need schools for four years after graduation. Graduates who enter into public service careers, such as teachers, public defenders and prosecutors, firefighters, nurses, non-profit workers, and more, will be eligible for complete loan forgiveness after 10 years of qualifying public service and loan payments.
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