Fixing the Crisis in College Affordability
The do-nothing approach by Congress to the student loan crisis is over. The dream of a better future depends on a college degree, and every American should have the opportunity to fulfill their aspirations. Senator Kennedy is acting now to lower the cost of a college education and help students manage the burden of their current loans.
The following is an outline of Senator Kennedy’s plans to make a college education attainable for anyone, regardless of income:
EDUCATION AGENDA
Contract for Educational Opportunity (CEO) Grants
Our ability to compete in today’s global economy requires that we value and encourage the talents of every individual. Essential to this effort is ensuring that every student who wants to go to college can afford to do so. I’ve proposed the creation of a Contract for Educational Opportunity grant program to make that possible. Under the program, students who sign a contract promising to meet certain state academic and non-academic requirements will receive a 50 percent federal match to cover their unmet needs. These state-based grants will be available to low-income students who enroll in a two- or four-year degree program at any institution of higher education.
College Quality, Affordability, and Diversity Act (QUAD)
Rising tuition has created serious financial barriers to higher education, forcing students to borrow money at unprecedented rates, or give up on college entirely at a time when the changing economy is increasing the need for college education. The College Quality, Affordability, and Diversity Improvement Act I’ve proposed includes several initiatives designed to make college more affordable and accessible for qualified students.
Helping Students Attend College:
Increased Funding for GEAR Up and TRIO – The bill will increase funds for GEAR Up and TRIO, which provide low-income and minority students with information and counseling on preparation for college, college admissions, and financial aid.
Increased Access to SAT and ACT Test Prep – The bill will create a new grant program to provide free test preparation for low-income students.
Informed Application and Enrollment Decisions – Low-income students are at a disadvantaged in Early Decision in college admissions, because they often need to compare financial aid packages from a variety of schools. The bill will require schools to report information on students who take advantage of and benefit from early decision and legacy admissions policies.
New Retention Programs – The bill creates a grant program for colleges and universities which serve high proportions of low-income students to provide them with the help they need to graduate.
Assistance for Migrant Students – The bill will increase funds for programs to help migrant students obtain GEDs and succeed in college.
Creating Opportunities for Students at Minority-Serving Institutions:
Expanded Opportunities for HSIs and HBCUs – The bill will create new grants for graduate programs at Hispanic Serving Institutions and Historically Black Colleges and Universities, and increase funding for current grants.
Attract and Retain Teachers at Tribal Colleges – The bill also creates a loan forgiveness program for those who teach at these institutions.
Student Aid Reward Act
Students currently seeking financial aid for college have two primary resources for loan assistance. The Direct Loan program offers loans directly from the U.S. Treasury. The second Family Federal Education Loan Program offers loans through private lenders and banks subsidized by the government.
The two programs provide essentially the same loans and interest rates to students, but the FFEL program costs billions of dollars more each year than the other. Instead of subsidizing banks, Direct Loans go directly to colleges and universities offering the financial aid. The Direct Loan program offers loan capital at a lower rate, eliminates the middleman, and avoids billions of dollars in unnecessary subsidies to banks.
The bill will encourage colleges and universities to use the more efficient Direct Loan program by rewarding these institutions with additional financial assistance for students at no additional cost to taxpayers. The savings generated by the Direct Loan program – estimated at more than $12 billion by the Congressional Budget Office – would be used to fund additional assistance for both undergraduate and graduate students.
Student Loan Sunshine Act
At a time when families are pinching every penny to afford the rising cost of college, we need to ensure that students are obtaining the lowest possible rate on their college loans. The aggressive marketing practices used by private lenders are troubling, causing many students to feel they are being exploited.
The Student Loan Sunshine Act calls for full disclosure of the agreements between lenders and colleges and universities. It will reform the student loan program so that it works for students and families, not banks. The bill will:
Require all institutions of higher education that receive federal funds to report annually any financial or material benefits the institution received from a lender.
Require all lenders that originate student loans at an institution of higher education to report annually all gifts over $10 and any other benefits granted to the institution.
Require all institutions of higher education to report publicly, on an annual basis, the interest rates on all loans made to students through arrangements between the lender and the institution; provide evidence justifying why they believe the arrangement represents a highly-competitive rate for students; and ensure that this information is provided to students at the institution.
The escalating cost of a college education is forcing students to borrow money at unprecedented rates. Congress must act to make college more affordable for students and their families, and that means putting a stop to conditions that prevent students from getting the best possible deal on their student loans.
Student Debt Relief Act
Millions of students and families across the country are struggling to pay for college. Because of the high cost of tuition, more and more students are forced to take out loans to finance their education, leaving them deeper and deeper in debt. The Student Debt Relief Act I’ve proposed takes important steps to address the growing crises of student debt.
The bill will cut student loan interest rates in half – to 3.4% for students and 4.25% for parents. In addition, the purchasing power of the longstanding and highly successful Pell grant has not kept up with the rising cost of college. The bill will increase the maximum Pell grant to $5,100 in the first year, with further incremental adjustments in each subsequent year.
The Student Debt Relief Act will help relieve student debt by capping federal loan payments at 15% of a borrower’s monthly income. Making student loan repayment contingent on income will provide students with needed assistance in dealing with excessive loans, and will encourage others to pursue a college education. In addition, the bill will forgive loans after 15 years, and provide loan forgiveness for public sector employees after ten years.
Finally, the Student Debt Relief Act will reduce origination fees in the Direct Loan program, allow students to reconsolidate loans, just as they would refinance a home mortgage, and close several loopholes in current law that allow schools to circumvent School and Lender restrictions, and permit lenders to reap unusually high reimbursements from the government for defaulted loans. These and other provisions will help students and families struggling to cope with the rising cost of college and the subsequent mountain of debt.
Students and their families clearly recognize the importance of a college degree, but are struggling with the financial challenges that come with it. These proposals offer practical measures to ease the burden and make a college education possible for many more students.
–Lauren Miller |
