Congressman Faleomavaega today announced that the recently passed H.R. 4872, the Health Care and Education Affordability Reconciliation Act of 2010, included major student aid reform that will provide substantial benefits to college-bound students from American Samoa.
“I am pleased to share that, in addition to making significant changes to America’s health care system, this new law will make important investments in many federal student aid programs that directly affect our students. These investments will help more of our students pay for and succeed in college through affordable loan options and increased funding in grants and support services,” the Congressman stated.
Makes student loans more accessible
Beginning in July 2010, this new law will take the middle man out of student lending by switching all schools to the more efficient Direct Loan program, which lends money directly to students, instead of giving subsidies to banks. This change will result in $61 billion saved over the next 10 years, money that will be re-invested in students through the Direct Loan program, the Pell Grant, and other programs.
Increases the maximum Pell Grant and the number of grants available
Of the money saved, $36 billion will go to the federal Pell Grant program, which offers need-based educational grants that do not need to be repaid. The U.S. Department of Education reports that roughly $115 million in Pell Grant funding will be available to students from American Samoa over the next 10 years, reaching a little more than 26,000 students.
The maximum Pell Grant will rise to keep up with the costs of tuition and books, jumping to $5,550 in 2010 and $5,975 by 2017. It will also be linked to the Consumer Price Index to match future increases in costs.
Expands the income-based loan repayment program
To ensure that loan payments are not a burden, the law also includes a new system of loan repayment and loan forgiveness for federal student loans. Right now students can cap their loan payment at 15% of their discretionary income. Any balances left after 25 years of payments will be forgiven. After full implementation of the bill in 2014, new borrowers will have their federal student loan payments capped at 10% of their discretionary income with payments forgiven after 20 years.
Increases funding for college access, completion, and support
The law also increases funding to $750 million for College Access Challenge Grants, aimed at increasing the number of low-income students who are prepared to enter and succeed in college. Of this total, there will be $7.5 million in available funding for American Samoa over the next 5 years.
College Access Challenge Grants are distributed through project proposals which are submitted to the U.S. Department of Education. Authorized projects are those that offer support services such as: providing college and career information to students and families; promoting financial literacy and debt management; assisting students in completing the Free Application for Federal Student Financial Aid (FAFSA); providing need-based grant aid; conducting professional development for college admissions counselors; and offering loan incentives for borrowers who are employed in a high-need geographical area or a high need profession.
Invests in universities and community colleges
To build capacity in support services, the government will also dedicate $2.55 billion to Minority-Serving Institutions, like those that enroll our students from American Samoa. These funds will help provide students with the assistance they need to stay in school and graduate. Each year, an institution must re-apply for eligibility to be considered for the following fiscal year.
Lastly, a new $2 billion national competitive grant program will help community colleges develop and improve educational or career training programs.
“I would like to take this opportunity to thank President Obama and Speaker Pelosi for their dedicated leadership and for making sure our youth gain affordable access to higher education. As our economy recovers, it is important to be assured that our students and their families will have greater means to finance their education and that our colleges will be supported in their efforts to help our students thrive in their studies and future endeavors. That we can better provide this basic right to our young people is a victory for us all,” the Congressman stated.
“More importantly, I would also like to encourage all of our students in their pursuit of higher education and commend their parents, family members, educators, and mentors for their support and guidance along the way. The passage of this bill is a sure sign that America makes it a priority to offer opportunities for students of all socioeconomic backgrounds to accomplish their dreams. I encourage ours students to constantly seek out these opportunities and I am confident that the new law will help bring the dream of higher education closer to reality,” the Congressman concluded.