Tuesday, July 1, 2008
MEDIA CONTACT: STEVEN ENGELHARDT (314) 504-4029
College Cost Reduction & Access Act Begins Today, Cuts Student Loan Rates, Boosts Pell Grants, Increases Support for Historically Black Colleges
&ldquoClay Says Act is Most Important Education Investment Since 1944 GI Bill”
WASHINGTON, DC &ndash As a result of an historic student aid law enacted by the Democratic Congress and cosponsored by Congressman Wm. Lacy Clay (D) Missouri, starting today (July 1st), interest rates on need-based federal student loans will decrease from 6.8 percent to 6.0 percent, the first of four steps to cut these interest rates in half over four years.
"This bill is the largest single boost in college financial aid since the 1944' GI Bill," said Mr. Clay. "It will make college more affordable for middle class and low income families and we will achieve that at no new cost to the taxpayers. The average undergraduate student in Missouri who receives a federally-backed loan will save approximately $2,500. One of the most important elements of this bill is a significant increase in Pell Grants, which I have fought for since I first came to Congress. Over the next five years, the maximum value of the Pell Grant scholarship will increase by $500."
Under the College Cost Reduction and Access Act, interest rates on need-based (subsidized) federal student loans will continue to decrease over the next four years, until they reach 3.4 percent. These federal loan interest rates provide far greater savings than more expensive private loans, whose interest rates can run as high as 19%. Furthermore, private loans often have variable rates that can result in unexpectedly high monthly payments. In contrast, federal loans will stay fixed at the same low rate over the life of the loan. 5.5 million students take out need-based federal student loans each year.