A well-educated workforce is critical for regaining America’s long-term competitive advantage. But the cost of paying for college and community college is becoming even more burdensome for Americans in this economy. While families are losing income and benefits, college tuition prices continue to rise. The average student now graduates with over $22,000 in total student debt, including federal and private student loans.
It’s critical for current college students, new or soon-to-be graduates, and workers seeking higher education to know about new benefits that went into effect July 1 that will make student loan payments more manageable for millions of Americans.
– Cheaper interest rates on federal student loans: On July 1, the interest rates on subsidized federal student loans decreased from 6 percent to 5.6 percent. This is the second of four annual cuts in this interest rate; it will continue to drop until it reaches 3.4 percent in 2011.
– Affordable monthly college loan payments: On July 1, a new Income-Based Repayment program went into effect that caps borrowers’ monthly loan payments at just 15 percent of their discretionary income. Any current or future borrower whose loan payment exceeds 15 percent of their discretionary income is eligible. To find out if you are eligible or to learn more, visit: www.ibrinfo.org.
– Higher Pell Grant scholarships: Due to funding provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act, the maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350.
In addition, the law provides up-front tuition assistance, known as TEACH Grants, of $4,000 a year – for a maximum of $16,000 – to students who commit to teaching high-need subject areas in underserved schools for four years after graduation. Graduates who enter into public service careers, such as teachers, public defenders and prosecutors, firefighters, nurses, and non-profit workers will be eligible for complete loan forgiveness after 10 years of qualifying public service and loan payments.
To further address the problem of college affordability, I co-authored the American Opportunity Tax Credit, which was recently signed into law as part of the American Recovery and Reinvestment Act. The new tax credit of up to $2,500 can be applied to the cost of tuition and related expenses – including textbooks for the first time – for 2009 and 2010. And 40% of the tax credit, or up to $1,000, is refundable.
Our community colleges are also incredibly important in providing world-class education and making America more competitive. Recently, President Obama announced the American Graduation Initiative, which will build on the strengths of community colleges and launch new initiatives and reforms that will increase their effectiveness and impact. He called for a goal of an additional 5 million community college graduates by 2020. The initiative consists of the following elements:
– Create the Community College Challenge Fund: These competitive grants would enable community colleges and states to innovate and expand proven reforms.
– Fund Innovative Strategies to Promote College Completion: This fund will finance the innovation, evaluation, and expansion of efforts to increase college graduation rates and close achievement gaps, including those at community colleges.
– Modernize Community College Facilities: Many colleges face large needs due to deferred maintenance or lack the modern facilities and equipment needed to train students in technical and other growing fields.
– Create a New Online Skills Laboratory: New open online courses will create new routes for students to gain knowledge, skills and credentials.
Please feel free to contact me to share your concerns and ideas. You may call 1-888-4-TOM4US (1-888-486-6487); write to 1520 Longworth House Office Building, Washington, D.C. 20515; or visit www.perriello.house.gov to sign up for my weekly e-newsletter.
Tom Perriello represents the Fifth District in the United States House of Representatives.
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