“Today
Congress voted to make historic investments into financial aid by ending
sweetheart deals for big banks and lenders. This is a game-changing
bill that banishes banks from the federal student loan program while
aiding students mired in education debt.
“This investment
increases Pell grant funding at a time when tens of millions of students
are assuming record levels of debt to pay for college. The number of
students graduating with over $40,000 in loan debt has increased
ten-fold in the last decade. A massive $36 billion infusion into the
need-based Pell grant program will provide immediate relief to student
borrowers. Not only are Pell grants stabilized for over eight million
students, the aid is increased substantially over the next 6 years. The
bill also expands on the Income Based Repayment program making loan
repayment more manageable for graduates, benefits that will extend to
over one million more borrowers.
“One of the best things about
this bill is that it doesn’t cost taxpayers a dime. For years, the
federal government has been funding middlemen lenders to make loans to
students. These lenders make federal loans at almost zero risk and full
profit, while providing no tangible benefits to students. Instead, all
federal lending will occur through the efficient and effective Direct
Loan program.
“The federal Direct Loan program will increase
student protection from aggressive private loan marketing. Lenders used
inducements to convince financial aid offices to push private student
loans on students and families. These private loan products are more
akin to credit cards with variable interest rates as high as 18% and
limited repayment options and benefits. Originating loans from the
federal government will give the time students need to assess their
financing options in a fair setting.
“This legislation helps renew the promise
of student aid programs for the tens of millions of students who rely
on grants and loans to achieve a college education. We applaud Congress
for prioritizing the Pell grant program, and education, and we look
forward to President Obama’s final signature.”
