Today the House Education and Labor Committee is scheduled to consider legislation that would dramatically increase student aid by increasing Pell Grants and loan limits, cutting student loan interest rates, providing income-contingent student loan repayment, and offering new loan forgiveness programs.

The College Cost Reduction Act would increase federal spending on student aid by nearly $20 billion and would pay for this increase by cutting federal subsidies to student loan companies and guaranty agencies.

House Education and Labor Committee Chairman George Miller (D-CA) introduced the bill Tuesday claiming that it would “make the single largest investment in college financial aid since the GI Bill” and do so “at no new cost to U.S. taxpayers.”

Among the benefits to students contained in the bill, it would:

-Cut interest rates in half on subsidized student loans over the next five years.
-Increase federal loan limits to provide borrowers with additional assistance in paying for college and to help them rely less on costlier private loans.
-Increase the maximum Pell Grant scholarship by at least $500 over the next five years, ultimately reaching a maximum scholarship of at least $5,200.
-Expand eligibility to include and serve more students with financial need.
-Provide upfront tuition assistance to qualified undergraduate students who commit to teaching in public schools in high-poverty communities or high-need subject areas.
-Provide loan forgiveness for first responders, law enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, librarians and others.
-Revise policies to allow public servants to have their loans forgiven after 10 years.
-Establish a partnership with federal, state and local government entities, and philanthropic organizations through matching challenge grants aimed at increasing the number of first-generation and low-income college students.

To pay for this aid the bill would:

-Reduce special allowance rates to lenders
-Eliminate the exceptional performer status
-Reduce lender insurance
-Reduce guaranty agencies’ collection retention
-Increase lenders’ loan fees

*The National Association of Student Financial Aid Administrators (NASFAA) is the professional association of the individuals who manage financial aid at the nation’s postsecondary institutions.

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