Crushing Student Debt

What's New

On September 17th, the House of Representatives passed HR 3221, the Student Aid and Fiscal Responsibility Act of 2009, a massive student aid bill that passed out of committee in late July by a vote of 30-17. CLICK HERE to see the student activism that helped build support for this bill.

HR 3221 is single largest investment in higher education in history that will significantly reduce loan debt burden for college graduates.

The bill reinvigorates the Pell Grant program, which provides need based aid to over 7 million current college students. The bill raises the Pell Grant maximum to $5,550 for students of the most modest means, and guarantees that the Pell Grant amount will increase thereafter on a yearly basis by the cost of living + 1%.

It also cuts the interest rate on subsidized Stafford student loans, and invests in community college access programs that should help hundreds of thousands of students get to graduation.

These investments are paid for by cutting excessive lender subsidies from within the loan programs, and redirecting those funds toward higher education.

We’ll need your help to ensure that the Senate approves measures that would increase aid to students.

Overview

Currently, the federal government operates two major programs to provide loans to help students pay for college: the private sector Federal Family Education Loan (FFEL) program and the government’s Direct Loan (DL) program.

Former President George W. Bush’s last two budgets revealed that the bank (FFEL) program costs taxpayers billions of dollars more each year to run than does the DL program.

From 1992 to 2004, the cumulative taxpayer subsidy costs were $39 billion for FFEL loans, and only $3 billion for Direct Loans. For a typical college student’s debt of $20,000, the federal government spends nearly $2,200 more in subsidy costs for a loan through the FFEL program.

Building upon that evidence, President Obama this year proposed to eliminate the excessive subsidies to instead apply that money to financial aid.

Rep. George Miller (D-CA), center, with CALPIRG Higher Education Field Coordinator Tessa Atkinson-Adams (L) from University of California-Santa Barbara, and Komal Karnik (R) a U.S. PIRG intern from University of Virginia, at a House Education and Labor Committee hearing on May 21, 2009, where representatives examined proposals that would dramatically increase financial aid.