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Congressman Hoyer: Democratic-Led Congress Made College More Affordable
Final Interest Rate Cut Took Effect on July 1st

By PRESS OFFICER
Rep. Steny Hoyer’s Office

Washington, DC – Congressman Steny H. Hoyer (MD-5) announced that on July 1st, the interest rate on subsidized student loans will be cut to 3.4% – the last of four steps to reduce the cost of college under the College Cost Reduction and Access Act enacted in 2007 by a Democratic-led Congress. Due to these cuts, the average student borrower who started college in 2008 will have saved $2,570 over the life of their loan.
“With students and families struggling under the weight of increased tuition prices, the high cost of college remains a top concern for many Americans," stated Congressman Hoyer. “There is some good news, however, for college students and their families here in Maryland and throughout the nation with the new financial aid benefits taking effect today. By cutting interest rates on student loans and making other investments in higher education, the Democratic-led Congress helped make college more affordable for millions of students and their families and opens the doors of higher education to those who might otherwise be shut out because of cost.”
Millions of students take out subsidized student loans each year. Under the College Cost Reduction and Access Act, the interest rate on subsidized student loans has been cut as follows:
On July 1, 2008, the interest rate was cut from 6.8% to 6.0%;
On July 1, 2009, the interest rate was cut from 6.0% to 5.6%;
On July 1, 2010, the interest rate was cut from 5.6% to 4.5%; and
On July 1, 2011, the interest rate will be cut from 4.5% to 3.4%.
The cutting of the interest rate on these subsidized student loans in half – from 6.8% to 3.4% over four years – was enacted as part of the Democratic-led Congress’s agenda to make college more affordable and accessible for millions of American students. Democrats believe that making college more affordable is one of the most important things we can do to invest in our nation’s future and build a stronger middle class.

Also, on July 1, due to provisions in the 2008 Higher Education Opportunity Act, new college affordability information will become available to young people and their families on the Department of Education website. This information will help prospective college students and their families shop for the best value – based on their individual circumstances -- for a college education. This new information will provide students and their families early estimates of their expected college costs, and allow them to estimate the annual and total cost of a college education at the individual colleges or universities they are interested in. Also available will be information on incentives for attendance, such as need-based aid, that individual colleges and universities may be offering.

In addition to cutting interest rates in half and requiring new online college affordability information, the Democratic-led Congress, between 2007 and 2010, took numerous other steps to make college more affordable, including the following:

Increasing Maximum Pell Grant: Between 2007 and 2010, the Democratic-led Congress increased the maximum Pell Grant from $4,050 to $5,550 (after Republican-led Congresses had frozen the maximum Pell Grant for four years, despite the rapidly rising cost of colleges). Increasing Pell Grants has been a critical component of Democrats’ agenda to make college more affordable for millions of America’s young people. Currently, there are about 9 million students receiving a Pell Grant to help pay for the costs of college. Click here for district-by-district information on the number of Pell Grant recipients and the total Pell Grant aid provided in each congressional district, prepared by the Department of Education, for the 2011-2012 academic year.

Income-Based Repayment Program: The Democratic-led Congress established the Income-Based Repayment Program that began on July 1, 2009, which makes student loan payments more manageable for student borrowers by guaranteeing that borrowers will not have to pay more than 15 percent of their discretionary income in loan repayments.

Public Service Loan Forgiveness: The Democratic-led Congress also established the Public Service Loan Forgiveness Program that began on October 1, 2007, under which graduates who enter into public service careers such as teachers, public defenders, firefighters, nurses, non-profit workers and more, are eligible for complete loan forgiveness after 10 years of qualifying public service and loan repayments.

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