The Reverse the Raid on Student Aid Act includes a range of measures to make college more affordable. The bill reduces interest rates on subsidized student loans for parents and student borrowers from 6.8% to 3.4% for one year, from July 1, 2006 to July 1, 2007. Subsidized loans are loans on which interest does not accrue until after a student’s graduation. Loans that are taken out during the year long period of reduced rates are locked in for the life of the loan. The bill also creates a pilot program for a year-round Pell Grant, as opposed to the typical nine month grant, for students studying full time throughout the year. The legislation also allocates $10 million to teacher training programs to recruit and train high quality teachers. Additionally, the bill offers loan forgiveness to students training in areas of national need, like teaching and nursing.
The Reverse the Raid on Student Aid amendment establishes a new program to boost the college attendance and completion rates at colleges and universities that serve predominantly Black, Latino, and Native American students. The Reverse the Raid on Student Aid Act also requires the creation of an “EZ FAFSA”- a free simplified paper and electronic version of the current Federal Application for Student Aid (FAFSA) that is used to determine the need and eligibility of a student for financial assistance. The legislation costs $37 billion over five years.
The Middle-Class Position:
Middle Class Supports. Although a college education is increasingly a prerequisite for a middle-class standard of living, current and aspiring middle-class students and their families are struggling more than ever to afford college. 60% of students graduating with bachelors degrees in 2006 used student loans to pay for their education, and they carried a median total debt of $19,300.
By reducing the interest rate on subsidized loans, from 6.8% to 3.4%, the amendment would save a student borrower up to $5,600 over the life of his or her loan. Expanding the Pell Grant program would allow financially strapped students to take classes year round, whether out of financial necessity or a desire to finish their studies faster. The grants authorized by the legislation target assistance to make college more accessible to those low-income and minority students that cannot afford higher education. Loan forgiveness for students who train in areas of national need like teaching and nursing will keep some of the most important career paths open to all students regardless of their financial situation after graduation. The amendment would not only help students and families struggling to afford college costs, but would also help relieve graduates of debt burdens that may negatively impact the future course of their lives.
From the Experts:
“Increasing access to higher education is important for our economy and democracy. Those with a college-education are less likely to live in poverty, be unemployed or go to jail—thus boosting tax revenue and our economic output. At the same time, college-educated Americans are more likely to volunteer and vote, key ingredients for a strong democracy.” –Earl Hadley, Campaign for America’s Future (April 14, 2006)
“Soaring tuition prices, along with anemic levels of federal student aid, have created a debt-for-diploma system that is stunting many young adults’ economic progress as they try to start their lives. It crushes the aspirations of others, who either enroll in two- year institutions instead or just forgo college altogether, knowing all the while that the rest of their lives will be shaped by whether or not they get through college.” –Tamara Draut, Author, Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead (2006)
Beyond this Bill:
A one year reduction in rates for subsidized student loans is a modest step toward making college more affordable. To further lower college costs, policymakers should make the rate cut permanent. Legislators should also increase funding for Pell Grants, which serve low-income students who most need a college education to attain a middle-class standard of living, and raise the maximum Pell Grant to keep up with rising college costs. Legislators should also reconsider the role that private lenders play in making student loans – in many cases, the Federal Direct Lending program is a better deal for both students and taxpayers. Advocates have also called for additional reforms allowing students to lessen the burden of debt from fixing loan payments at a percentage graduates’ of income to limiting interest accrual when graduates are facing financial hardship. Finally, Congress should allow borrowers to discharge student loans during bankruptcy. Without this provision, borrowers already facing financial decline must continue to repay student loans, while other types of consumer debt, such as credit card debt, are discharged. Investment in education, perhaps the most important investment an individual can make, should be encouraged and protected, not penalized.
Median debt level of bachelor degree recipients who borrowed for college: $19,300
Percentage of college graduates under age 35 that are paying off college debt who say their loans will take them more than ten years to pay off: 39
Percentage of them who say they have delayed a medical or dental procedure because of their debts: 27
Proportion who say their college loan debts have caused them to delay getting married: 1 in 6
Percentage of Americans who say that the federal government is doing too little to make
higher education more available and affordable for people of all backgrounds: 64
Percentage of Americans who believe the amount of student loan debt carried by students graduating from college today is manageable: 31
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