Hope On The Horizon: Student Debt Relief Act in Senate
I have posted blogs in the past several weeks regarding states that are implementing college financial aid programs at the community college or public college level, making education an affordable reality for lower-income students. Just yesterday a major Ivy League school announced that it was freezing tuition for an entire year (see my Thursday, Jan. 25, 2007 post for more info). While this all is good news, nationwide reform implies national legislative action.
It seems that everyone is waiting to see what will happen in the U.S. Senate now that H.R. 5 has passed the House. Hot on its heals comes a tandem effort by Sens. Edward Kennedy, D-MA, and Barbara A. Mikulski, D-MD, introducing the Student Debt Relief Act, whose purpose is to supply college student aid to borrowers who use loans to cover costs of their education, according to a Jan. 23, 2007 press release titled “Mikulski Fights For Student Debt Relief” issued from Mikulski’s office.
American Dream or Financial Nightmare?
According to a statement by Mikulski, who also serves as a member of the Health, Education, Labor and Pensions (HELP) Committee, “College tuition is on the rise across America. Our students are graduating with so much debt it’s like their first mortgage,” said Mikulski. “American families are stressed and stretched, and students are looking for help. We must make access to higher education a priority for everyone.”
College Affordability Solutions on the Way
Our government officials, in particular Mikulski and Kennedy, who also serves as chairman of Senate Health, Education, Labor and Pensions, finally may have given voice to what many college students and their parents have known for quite some time. It is getting exorbitantly expensive to achieve the American dream of attending college. A recent survey I came across stated that many students now are “settling” for their second choice of schools, in order to incur less debt. Hopefully, the new bill, which appears poised to help borrowers and instigate much-needed change, will quickly become law.
According to the press release, “The legislation outlines relief for student debt by addressing a number of critical issues including:
· Pell Grants: Increases maximum Pell Grant to $5,100.
· Interest Rates: Cuts student loan interest rates in half – to 3.4 percent for subsidized undergraduate student loans over 5 years.
· Debt Relief: Caps federal student loan payments at 15 percent of a borrower’s monthly discretionary income, and forgives student loans after 25 years.
· Public Service Loan Forgiveness: Provides loan forgiveness for social workers, teachers, police officers and other public sector employees after 10 years.
· College Tuition Tax Deduction: Extends college tuition tax deduction and increases allowable deduction to $12,000.
· Consolidation/Reconsolidation: Allows students to reconsolidate loans, repeals the elimination of in-school consolidation.
· Origination Fees: Reduces origination fees in Direct Loan program by 1 percent to track FFEL program origination fee reduction, and gives secretary explicit authority to reduce origination fees (as FFEL lenders have).”
It is important to keep up to date on the effects of legislation and news on student loans and education. What goes on in government and in your state can have a great impact on your student loans and your college education.
For all the information you need about student loans, go to www.nextstudent.com.
Be sure to tune in next Wednesday for my next blog on student loan legislation in the news.
Student Loan Girl