Bush lowers rates for Stafford loans, increases Pell grants

On Thursday, President Bush signed legislation that will bring relief to the millions of financially strapped students struggling to pay off college.\nDespite previous veto threats by the Bush Administration, the President said the bill would help make higher education a reality for millions of low-income citizens. \n“I love the fact that this country is dedicated to helping people who want to realize their dream,” Bush said during the signing ceremony, according to The Associated Press. “The College Cost Reduction and Access Act expands one of America’s most important and successful education initiatives – the federal Pell grant program.”\nThrough the new legislation, the Pell grant award, which currently provides need-based grants to five million low-income undergraduate students all over the nation, will substantially increase over time. According to Act, the maximum Pell grant award will increase from $4,310 to $5,400 by 2012. \nThis new legislation will also lower the interest rates of Stafford Loans – need-based federal student loans – by half, from 6.8 percent to 3.4 percent over the next five years.\nAccording to an IU report compiled by the University Reporting and Research Office, from 2005 to 2006, there were more than 21,000 IU students who were given grants and more than 17,000 students taking out loans.\nAlthough the new provisions under the act will only apply to new loans, senior Matt Licata said he is in favor of the bill.\nLicata said that throughout college, he has accumulated about $60,000 worth of loans and has not paid any of it back. \n“It sounds like a good idea,” Licata said, “It’d be nice to have a low interest. I’m already in enough debt as it is.” \nThe College Cost Reduction and Access Act will also help with the financial burdens loans impose on students and their families. A new income-based repayment program will be implemented to protect borrowers with low monthly incomes. Borrowers will not have to pay back more than 15 percent of their discretionary income each month and will have their loans forgiven if they are in economic hardship after 20 years.\nIncentives such as tuition assistance will also be \nprovided to those who commit to teaching at public schools in high-poverty communities. In addition, loan forgiveness will be given to students after working 10 years in a public sector such as emergency first-responders, nurses, firefighters, prosecutors, early-childhood educators and librarians. \nAccording to a Congressional release, the legislation is going to pay for itself through the reduction of about $20 billion in subsidies paid to private lenders in the college loan industry. So even with the increased aid and benefits, the act will be at no additional cost to tax payers. \nStill, junior Chuk Li said the new legislation won’t convince him to take out more loans. \n“I think the grants will help a lot,” Li said. “But I still have to pay back the loans. It’s not like they’re free.” \nBut senior Emily Jackson, who said she has about $22,000 in loans, said she feels differently. It was only with grants, loans and employment, has she managed to pay about 70 percent of her college costs. Although she planned on graduating this summer, she said the new legislation may increase the chances of her staying an extra semester at IU. \n“The fact that I’ll probably get a lot more money would definitely affect my decision to stay an extra semester or even over the summer,” Jackson said. \nJacqueline Kennedy-Fletcher, the senior associate director of Office of Student Financial Assistance, said that any bill that will allow an increase in Pell grants and a reduction in student loan interest rates is “a step in the right direction, in regards to assisting students with achieving their educational goals.”\nThe College Cost Reduction and Access Act provides the greatest increase in student financial aid since the ‘GI Bill’ signed into law by President Franklin D. Roosevelt in 1944. The GI Bill allowed 7.8 million veterans of World War II to participate in education and job training programs.