Members of the U.S. House Education and Labor Committee voted 30-16 Wednesday to pass H.R. 2669, a bill that would pay for expanding federal grant programs for students by cutting subsidies for student loan companies.
The bill, introduced by Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, and other lawmakers, also could require colleges to justify unusually large increases in tuition prices, and it includes a section, Section 104, that could affect education planning professionals, by affecting the way the federal government treats 529 plans, Coverdell education savings accounts and state prepaid tuition programs when estimating students’ financial aid needs.
Miller says H.R. 2669, the College Cost Reduction Act of 2007, would boost college financial aid by about $20 billion over the next 5 years.
The grant provision of the bill would boost the maximum value of Pell Grant scholarships over the next 5 years to $5,200, from $4,050. About 5.5 million low-income and moderate-income students would benefit from this increase, Miller says.
The bill also would cut interest rates on need-based student loans to 3.4%, from today’s rate of 6.8%, by 2013.
The rate cut could save a typical student borrower $4,400 over the life of a typical $13,800 need-based loan.
About 6.8 million students take out need-based student loans each year, according to Miller.
The bill also calls for:
oTuition assistance for undergraduate students who agree to teach in the nation’s public schools.
oLoan forgiveness for college graduates who go into public service.
oIncreased federal loan limits, to cut students’ reliance on costlier private loans.
oNew tuition cost-containment strategies.
oAllowing income-based repayment for student borrowers, capping their loan payments based on their income, and cancelling their debt after 20 years.
oIncreasing the allowable amount working students can earn without reducing their financial aid.
The bill also clarifies that funds placed in 529 plans and other educational savings plans are counted as assets of the parents rather than as assets of the dependent students, according to a spokeswoman for Miller.
The provision could help maximize the net amount of plan assets that students can apply toward paying for college.
A copy of a substitute version of H.R. 2669 that was approved Wednesday during the Education and Labor Committee hearing is available