Congress Pushes to Cut the Cost of College

Paying for College
1

<p>I found this on military.com today. I'm sorry if it's already been posted. This seems like a good bill. I think I'll do a little more read-up on it and maybe contact my public officials. What does everyone else think? </p>

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Congress Pushes to Cut the Cost of College</p>

<p>"This is a tremendous, historic step towards realizing the goal of making college affordable for every qualified student in the country"</p>

<p>U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, has introduced legislation that would make the single largest investment in college financial aid since the GI Bill, helping millions of students and families pay for college – and doing so at no new cost to U.S. taxpayers.</p>

<p>The legislation, the College Cost Reduction Act of 2007 (H.R. 2669), would boost college financial aid by nearly $20 billion over the next five years. The legislation pays for itself by reducing excessive federal subsidies paid to lenders in the college loan industry. It also includes $750 million in federal budget deficit reduction. The Education and Labor Committee will vote on the legislation later this week.</p>

<p>“This is a tremendous, historic step towards realizing the goal of making college affordable for every qualified student in the country,” said Miller. “For years, college costs have been growing rapidly, far outstripping families’ ability to pay them. With this bill, we are saying that no one should be denied the opportunity to go to college simply because of the price.”</p>

<p>Under the legislation, the maximum value of the Pell Grant scholarship would increase by $500 over the next five years. When combined with other Pell scholarship increases passed or proposed by Congress this year, the maximum Pell Grant would reach $5,200 by 2013, up from $4,050 in 2006, thus restoring the Pell’s purchasing power. Roughly 5.5 million low- and moderate-income students would benefit from this increase.</p>

<p>The legislation would also cut interest rates in half on need-based student loans, reducing the cost of those loans for millions of student borrowers. Like legislation passed by the House earlier this year, the College Cost Reduction Act would cut interest rates from 6.8 percent to 3.4 percent in equal steps over the next five years. Once fully phased-in, this would save the typical student borrower – with $13,800 in need-based student loan debt – $4,400 over the life of the loan. About 6.8 million students take out need-based loans each year.</p>

<p>The College Cost Reduction Act includes a number of other provisions that would ease the financial burden imposed on students and families by the cost of college, including:</p>

<pre><code>* Tuition assistance for excellent undergraduate students who agree to teach in the nation’s public schools;
* Loan forgiveness for college graduates that go into public service professions;
* Increased federal loan limits so that students won’t have to rely as heavily on costlier private loans; and
* New tuition cost containment strategies.
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<p>President Franklin Roosevelt signed the GI Bill into law in 1944. The original law enabled 7.8 million veterans of the second World War to participate in education or job training programs.</p>

<p>Visit the Military.com Education Center to learn more about financial aid, Military Tuition Assistance, scholarships, family education programs, the GI Bill and more.

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* Tuition assistance for excellent undergraduate students who agree to teach in the nation’s public schools;

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<p>What's to stop colleges from simply raising tuition for these students (by reducing their financial aid) and thereby capturing the subsidy?</p>

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* Loan forgiveness for college graduates that go into public service professions;

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<p>Not a bad idea in principle, but the question is how much debt will be forgiven? I doubt it will be enough to make a big difference. </p>

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* Increased federal loan limits so that students won’t have to rely as heavily on costlier private loans;

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<p>Again, what's to stop colleges from capturing this subsidy by raising tuition?</p>

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New tuition cost containment strategies.

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<p>What exactly are these strategies? </p>

<p>The fundamental problem with a lot of government programs to help college students is that colleges have the ability to raise tuition to capture the benefits of these programs. So the programs end up enriching colleges without helping students at all.</p>

<p>In my opinion, Congress needs to either (1) prohibit colleges from engaging in price discrimination in the same way that public utilities are prohibited from engaging in price discrimination; or (2) institute price controls (again, just like public utilities have their rates regulated). Or both.</p>

<p>JMHO.</p>

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Not a bad idea in principle, but the question is how much debt will be forgiven? I doubt it will be enough to make a big difference.

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<p>I checked, and it appears to be $5000 in debt forgiveness for 5 years of service.</p>

4

<p>The law also apparently provides that colleges that don't increase tuition more than a certain threshold are eligible to receive more Pell Grant dollars. </p>

<p>To me, this is very interesting. Federal student grant and loan programs are a huge bonanza for colleges. If Congress starts tying strings to that money, it could be very advantageous for students.</p>

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<p>damn, they stole my idea. xP</p>

<p>long story short, if i ever get elected to some position, i would advocate budget cuts on nearly everything except education.</p>

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<p>lskinner is right. All of the tuition assistance programs that have been enacted over the last couple decades simply prompt the colleges to raise tuition, enriching the colleges at taxpayer expense. Net impact to the student: a slight inflation-adjusted increase in college costs over the years.</p>

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<p>Agreed. Also, IMO, what is being offered is a drop in the bucket anyway.</p>

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<p>what I would like to see is the formula changed back so that the students who qualified in 2004 for Pell but lost it- can get it again.</p>

<p>My daughter also earned money to help pay loans with Americorps. Bush was elected with increasing money to fund public service as part of his platform, but instead funds were cut.
I think it is a valuable program and Id like to see it increased, as it not only aids students with money that they earn through volunteer services,but the training they get helps them be more successful in college and in the workforce.</p>

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Created by Congress in 1972, Pell Grants now go to all students with an expected family contribution of $3,850 or less. Students who qualify for a grant of $200 or $300 automatically receive a $400 grant, even though the Higher Education Act, the federal law that governs most federal student-aid programs, provides for a $200 minimum grant.</p>

<p>Under current law, when the maximum Pell Grant increases, the maximum family contribution goes up by an equal amount, and more students become eligible for the program. The last increase was in 2003, when the maximum Pell Grant rose by $50 to $4,050, and the cutoff for an award increased from $3,800 to $3,850. Since then, a burgeoning deficit in the program -- the result of inadequate appropriations and a surge in demand for the awards -- has stymied the Bush administration's efforts to raise the maximum grant.</p>

<p>But in January, Mr. Bush announced his plan to eliminate that shortfall and raise the maximum Pell Grant by $500 over five years. That increase, which must be approved by Congress, could offset some of the cuts that will occur under the update, at least for students who remain in the program. For example, a student losing $300 under the update could recover $100 in the first year of the increase, $200 in the second year, and so on. For a freshman, that would mean $600 more in aid over the course of an undergraduate career

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<p>With inflation the income cutoff for Pell and other aid, is very low- and there are many more families that are struggling.</p>

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<p>the kinds of loans that will be forgiven are Perkins loans- loans that are supposed to be for low income students, although it is up to the college to decide.
These loans are already able to be forgiven, although money to do so has eroded, and fewer students find that available.</p>

<p>My daughter has $4,000 in Perkins, one for each year of college, but as they potentially can be forgiven, she didn't consolidate them at the same time she did her other loans</p>

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The bill did not appear to provide any new money for "capital contributions" to the Perkins Loan program. Such contributions — along with institutional matching funds and proceeds from repaid loans — go into a pool of revolving funds from which colleges make new Perkins Loans to students from low- and middle-income families.</p>

<p>However, the bill would provide $65.5-million for Perkins Loans forgiveness, the same as in the current fiscal year. President Bush had proposed abolishing that program.

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<p>There is no such thing as a free lunch.</p>

<p>The best thing the government could do in this arena is to apply the anti trust laws fully to universites. For example, by voiding the mutual aggreement amoung the Ivy League colleges and MIT that prohibits them from offering merit aid. A little competition is a beautiful thing.</p>