Student Loan Reform is Within Sight!

We at the Campaign for America’s Future congratulate the Senate today for passing historic student-loan reform, via a budget reconciliation bill that also contains historic health-care legislation. This reform ends wasteful billion-dollar bank subsidies with a shift to federal direct lending, and invests much of the savings to students.

But before we break out the bubbly, the House needs to pass the legislation later this evening.

This reform is a no-brainer, and Americans know this. According to a CNN/Opinion Research Corporation poll released yesterday, nearly two-thirds [1]of Americans support allowing the government to provide loans to students directly, instead of banks.

Why is there so much public support behind student loan reform legislation?

First, Americans are surely sick of the schemes and scams of the private student loan industry. By cutting the banks out as middlemen, along with their subsidies, taxpayers stand to save over $60 billion over the next decade.

By ending the federal handout to banks, a good bit of the savings can then be redirected to students in the form of Pell Grants and more affordable loans.

With reform [2]:

• The maximum annual Pell Grant will increase to $5,550 in 2010 and to $5,975 by 2017. Starting in 2013, the scholarship will be increase with costs of living by linking it to the Consumer Price Index.
• Monthly payments on federal student loans lower and debt is forgiven sooner. Starting in 2014, new borrowers who are eligible for Income-Based Repayment will be able to cap their monthly loan payments at just 10 percent of their discretionary income. That cap is currently at 15 percent for eligible borrowers. Additionally, borrowers who responsibly make their monthly payments will see their remaining balance forgiven after 20 years of repayment, reduced from 25 years in current law.
• Not just for students, student loan reform will invest billions more in worker training programs that involve partnerships between community colleges and businesses. This puts workers, especially those displaced in the recession, on a track to gain or reorient their skills to match available jobs.
• Reform also includes key investments such as $2.5 billion for minority-serving institutions and nearly a billion to support college access and completion programs.

But again, the House has YET to pass this landmark reform. We are so close, though. See how your Senator voted by clicking here. [3] Did they stand with students or bBanks?

Also, understand the money and lobbyists behind your senator’s vote by reading our report, “Money-Changers in the Senate.” [4]