House Passes Legislation for Loan Repayment

The College Cost Reduction Act of 2007, which passed 273-149, in the House of Representatives also calls for investing in minority institutions, controlling repayment rates and creating loan-forgiveness programs, among other actions. The legislation includes items such as:

• Guaranteeing that borrowers will not have to pay more than 15% of their discretionary income in loan repayments
• Increasing federal loan limits
• Providing upfront tuition assistance to undergraduates who commit to teaching in public schools in high-poverty communities or high-need subject areas
• Providing loan forgiveness for first responders
• Allowing public servants to have their loans forgiven after 10 years
• Investing in minority institutions, guaranteeing $500 million over five years
• Increasing Pell Grants
  

This is a huge step forward for college students. The bad news Bush threatened a veto because to put it bluntly there is not much of a payoff to private corporations. The Sallie Mae of the world will not get their fair share. The House did not get enough votes to override a veto.

Personally, for me the loan repayment aspect is great news. The measure would provide loan forgiveness of $5,000 for graduates who go into public service professions. It also would forgive outstanding debt for borrowers who have made 10 years of monthly repayments on their loans while serving in full-time government or nonprofit jobs.

"What we are seeing is increasing debt load for a broader set of graduates," said Max Stier, president of the nonprofit Partnership for Public Service, on Wednesday. "Unfortunately, people are likely to have debt for more than 10 years. This is a good incentive for people to stay on the public service road."

Further, for marriage advocates the measure would also correct "a severe marriage penalty" by combining the incomes of both spouses so that the amount the borrower must pay may increase vastly. The bill would attribute only half of a couple's income to each spouse. Maybe marriage could be worth it?

But, listen to George Miller a great democrat from California who gives the real reason the Corporate Republicans and the administration is against the bill. The administration's criticism said that the bill would increase financial aid expenses by $20 billion. Rep. George Miller, D-Calif., said the measure actually would be cost-neutral, because the money would come from cuts to what he called "excessive subsidies" to financial institutions participating in the student loan program. You know the people currently resigning and under investigation throughout the country.

This is a bill that is fair and well overdue. George Miller said "the legislation as the biggest investment in students since President Franklin Roosevelt signed the GI Bill into law in 1944, enabling 7.8 million veterans of World War II to participate in education or job training programs.

See a very good analysis of the bill here.