Beginning July 1st, the first phase of largest college aid expansion in six decades kicks in, according to a release sent out from House Speaker Nancy Pelosi's office. This was part of the number of bills pushed through Congress in 2006 when the New Direction Congress rolled into town.
In efforts to help middle class families live more affordable, the House passed, among other things, a minimum wage increase as well as the the expansion in college aid which includes an expansion of Pell Grants as well as this reduction in interest rates which will cut in half by 2011 and will begin with a drop from 6.8% to 6.0%.
According to the release
"This cutting of the interest rate will benefit the 6.8 million students who borrow need-based federal student loans each year. Once fully phased in, this interest rate cut will save the typical student borrower – with $13,800 in need-based student loan debt – an average of $4,400 over the life of the loan."
Thanks to the College Cost Reduction and Access Act, which provides more than $20 billion in federal student aid over the next five years, interest rates on need-based (subsidized) federal student loans will drop from 6.8 percent to 6.0 percent on July 1st – making these loans more affordable for millions of low- and middle-income students. This is the first of step towards halving these interest rates – over the next few years these rates will continue to decrease until they reach 3.4 percent.
Low and middle income students and families benefit most form this plan as 6.8 million students borrow need-based federal student loans each year.
other benefits they can begin receiving this fall. For the 2008-2009 school year, the College Cost Reduction and Access Act will also increase the Pell Grant scholarship by $490 (raising the maximum award to $4,731) an provide up-front tuition assistance of $4,000 each year for students who commit to teaching high-need subjects in high-need public schools.