Student loan debt has more than doubled over the past 10 years. The average college graduate will leave school this year owing $19,200, according to the nonprofit Project on Student Debt.
However, the House of Representatives approved the College Cost Reduction Act on July 11, which would lower interest rates on student loans and increase aid to low-income students who want to go to college.
The bill, HR 2669, passed 273-149, with 47 Republicans and 226 Democrats in favor, but fell short of a margin needed to override a possible veto by President Bush.
The measure follows the “100-hour” promise made by Democratic lawmakers during the last congressional elections to help relieve financial pressure on lower- and middle-class families facing soaring college tuition.
Speaker of the House Nancy Pelosi linked the cost of the Iraq war to tuition-help programs. “For six weeks in Iraq, we can expand higher education to all who wish to achieve it,” she said.
Financial barriers will prevent 4.4 million high school graduates from attending a four-year public college over the next decade, and prevent another 2 million high school graduates from attending any college at all, Pelosi added.
United States Student Association President Jennifer Pae welcomed the House action. “Students are victorious today,” said Pae in a press statement. “This bill is a step in the right direction towards ensuring that every qualified individual has access to higher education.”
The new bill would boost college financial aid by about $18 billion over the next five years. Pell Grants would increase by $500, and interest rates on federally backed loans would be cut in half.
In addition, if the bill is enacted into law, annual loan repayments would be capped at a percentage of a student’s income. The bill also provides for investment in colleges that serve a high percentage of African American, American Indian, Latino and other minority students, guaranteeing $500 million over the five-year period.
The bill would also provide loan forgiveness in the amount of $5,000 for students who become employees in the public service sector. And public servants would be granted a complete release from student loans after 10 years, and, in cases of economic hardship, complete forgiveness of federal student loans after 20 years.
Meanwhile, a similar bill is pending in the Senate. If that bill passes, then a joint House and Senate conference on a combined bill would begin.
Sen. Edward Kennedy (D-Mass.), chairman of the Senate Health, Education, Labor and Pensions Committee, told reporters that the House bill “is a big victory for students and families across America who are facing rising college costs.”
“The time to put the needs of students ahead of the profits of the banks is long overdue,” Kennedy said. “I look forward to passage of similar legislation in the Senate this month.”
President Bush has threatened a veto because, among other things, the bill cuts government subsidies to private lenders. But Republicans would have to face the political fallout if the popular measure doesn’t pass.
College Democrats of America President Lauren Wolfe said the president would be irresponsible if he were to veto the measure. “Considering how important the youth vote will be in 2008, Republicans who stand in the way of college opportunity for young people should expect to pay a heavy price in 2008,” she said.