pell grant

Student Loan Reform is Within Sight!

Armand Biroonak — Thu, 25 Mar 2010 16:11:41 -0400

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 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:

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. 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.”

Obama’s Budget: Supporting Students, Not Banks

Eric Lotke — Wed, 25 Mar 2009 14:28:34 -0400

President Obama’s budget proposal would transform the federal financial aid system that struggling students and families rely on to pay for college. The proposed budget cuts excessive lender subsidies, moves to more efficient direct lending instead, and invests the savings in students. The changes are major steps toward making college opportunity affordable for all Americans. This report explains the impact for students, nationally and by state.

» Download the full report (PDF)
» Related Reading: The Obama Budget: A Stick In the Eye For Banks

Over the past decade, states have cut their contributions to college budgets and grant aid has stagnated. Students have been forced to pay ever higher tuition and costs. At the same time, wages are flat and savings have plummeted. Facing skyrocketing cost, students and families have increasingly turned to loans to pay for college. The number of college students graduating with over $25,000 in student loan debt has tripled in the last decade. The rising debt squeezes students and families out of higher education.

New data from the National Center on Education Statistics show that in the United States, the average cost of tuition at a public four-year college increased $1,729, or 29 percent, between 2000 and 2007. Tuition went up 5 percent last year alone.

Among other changes, the Obama budget eliminates the Federal Family Education Loan Program, which excessively subsidizes banks, and moves to the U.S. Department of Education’s Direct Loan program. The Congressional Budget office projects this move to save $94 billion over nine years. The Obama budget then redirects the savings to students. The Congressional Budget Office estimates that in 2010-2011, $5 billion would be cut from subsidies to banks and lenders, and invested in students instead.

Redirecting the bank subsidies toward Pell grants would solidify the grant program as the premier source of assistance for low-income students. The Pell grant maximum would increase from $5,350 to $5,550; the estimated national average Pell grant award would increase by $121, from $3,299 to $3,423. Increasing the award will also enable an additional 130,000 more students to attend college per $100 increase in the maximum award.

This bold move is the type of reinvestment that is needed to get students into college so they get the education they need to move the country forward.

State Impact

These reports outline the impact of tuition cost increases in each state and the difference the Obama administration's student loan proposals would make by shifting funds from bank subsidies to direct student loans. (Click here for a map by Campus Progress showing this data.)

Alabama Report | News Release
Alaska Report | News Release
Arizona Report | News Release
Arkansas Report | News Release
California Report | News Release
Colorado Report | News Release
Connecticut Report | News Release
Delaware Report | News Release
Florida Report | News Release
Georgia Report | News Release
Hawaii Report | News Release
Idaho Report | News Release
Illinois Report | News Release
Indiana Report | News Release
Iowa Report | News Release
Kansas Report | News Release
Kentucky Report | News Release
Louisiana Report | News Release
Maine Report | News Release
Maryland Report | News Release
Massachusetts Report | News Release
Michigan Report | News Release
Minnesota Report | News Release
Mississippi Report | News Release
Missouri Report | News Release
Montana Report | News Release
Nebraska Report | News Release
Nevada Report | News Release
New Hampshire Report | News Release
New Jersey Report | News Release
New Mexico Report | News Release
New York Report | News Release
North Carolina Report | News Release
North Dakota Report | News Release
Ohio Report | News Release
Oklahoma Report | News Release
Oregon Report | News Release
Pennsylvania Report | News Release
Rhode Island Report | News Release
South Carolina Report | News Release
South Dakota Report | News Release
Tennessee Report | News Release
Texas Report | News Release
Utah Report | News Release
Vermont Report | News Release
Virginia Report | News Release
Washington Report | News Release
West Virginia Report | News Release
Wisconsin Report | News Release
Wyoming Report | News Release

Remembering "The Father of Pell Grants"

Alex Carter — Tue, 06 Jan 2009 15:58:59 -0500

On January 1, 2009, former Senator Claiborne Pell (D-RI) died at the age of 90. Known as the “father of Pell Grants,” Senator Pell was instrumental in helping low and moderate income students attend college, with the creation of Basic Educational Opportunity Grants in 1972, which were renamed “Pell Grants” in 1980.

The Federal Pell Grant Program provides need-based grants to low-income undergraduate and certain post-baccalaureate students to promote access to post-secondary education. In 2006-07, the Pell Grant was provided to over 5.1 million needy students and is estimated to increase to 5.4 million needy students in 2007-08. Since its creation, the Pell Grant Program is credited with helping over 54 million students attend college.

But Pell's legacy is endangered by today's economic realities. The creation of the Pell Grant was key to college affordability. During its early years, the Pell Grant covered 72% of the total cost of a public year-year institution. Today it only covers about 34%. Strides are being made, though. In 2007, the College Cost Reduction and Access Act passed, mandating Pell Grant Increases through 2017. President-Elect Barack Obama has vowed expand Pell Grants for low-income students and ensure that Pell Grants keep pace with the rising cost of college.

As we remember Senator Pell, and the strides he made to make college more affordable and accessible to low and moderate income students and families, let us also honor him by making sure that the Pell Grant will continue to make higher education accessible to all.

Senator Pell's legacy was and is a great investment in America’s future, and one that shouldn't be forgotten as we work towards economic recovery.

Pell Grants Said to Face a Shortfall of $6 Billion

Susan Ozawa — Wed, 17 Sep 2008 11:53:48 -0400

Bush administration officials to warn Congress that the most important federal aid program, Pell Grants, may need up to $6 billion in additional taxpayer funds next year. Driving the increased applications for federal aid, in part, have been nontraditional students returning to school to improve their job skills during the economic downturn. Estimates by the Department of Education suggest that the new president will face an unusually burdensome financing shortfall or the fallout that would accompany trimming the nation’s leading college aid program.

Pell Grants: Declining in Helping the Cost of College

Alex Carter — Fri, 14 Mar 2008 12:47:44 -0400

20 years ago, Pell Grants covered half the cost of attending public college. Today, it’s only one-third.