A committee of the U.S. House of Representatives approved yesterday the College Cost Reduction Act of 2007, which promises to reduce the cost of government student loans and increase the number and size of Pell grants.
Provisions of the bill call for cutting student-loan interest rates by half over the next 5 years, increasing federal loan limits so borrowers can rely less on more costly private loans, increasing the maximum Pell Grant scholarship by at least $500 over the next 5 years, and expanding eligibility for student loans to serve more students in financial need. The bill also provides upfront tuition assistance to qualified undergraduates who commit to teaching in public schools in high-poverty areas or in high-need subjects.
An analysis by the House Education and Labor Committee, which authored the bill, says the interest-rate provisions would save the typical student-loan borrower, with a need-based debt of $13,800, some $4400 over the life of the loan. The expansion of Pell grants in the bill would make another 600,000 students eligible for these awards. Graduate and undergraduate students can apply for federal student loans. Pell grants are reserved for undergraduates.
The committee's Web site has more details about the bill, including a detailed fact sheet. The committee claims in its announcement that the bill will pay for itself through reduced subsidies paid to private lenders, a savings of about $19 billion.