07.20.07

Cantwell: Senate's Pell Grant Expansion Will Make College More Affordable

Students Would Get Over $340 Million in New Grant Aid and Over $200 Million for Pell Grant Aid Next Year

WASHINGTON, DC – Friday, U.S. Senator Maria Cantwell (D-WA) praised quick Senate passage of legislation to make college more affordable. By a vote of 78 to 18, late Thursday night the Senate passed the Higher Education Access Act of 2007 to make college more affordable for more Americans at no cost to taxpayers by reducing excessive lender subsidies and redirecting federal aid to students who need it most.
 
“With 60 percent of new jobs requiring some post-secondary education, instead of 15 percent half a century ago, the best guarantee of a good, secure job in this global economy is a quality education,” said Cantwell.  “Skyrocketing tuition is making it more and more difficult for Americans to earn a college degree without going deep into debt. With this bill we’re helping more Americans attend college because no one should be forced to mortgage their future to pay for their education.”
 
With the help of federal Pell Grants, Cantwell was the first member of her family to graduate from college. She has worked to make college affordable since taking office. After the president’s 2008 budget proposal eliminated Perkins Loan funding and cut back funding for Pell Grants, Cantwell wrote letters to Budget Committee leaders asking them to restore the Perkins Loan funding and raise the maximum Pell Grant award from $4,310 to $5,100.  
 
This year, she reintroduced her legislation to increase by an average of $3,000 the tax benefits for families saving money for their children’s education.  This year, she reintroduced her legislation to increase by an average of $3,000 the tax benefits for families saving money for their children’s education. Her Education Savings for Students Act would increase the maximum contribution to Coverdell Education Savings Accounts to $5,000 per year—up from its current level of $2,000. 
 
 
The Higher Education Access Act of 2007 Would Deliver for Washington state Students:
  • Increase Need-Based Grant Aid and Increase College Access for Low-Income Students. The Act increases the maximum award for Pell Grant recipients to $5,100 in 2008 and to $5,400 by 2011. This means low-income Washington students will be eligible for an additional $39,600,000 in need-based grant aid next year, and an additional $340,600,000 over the next five years.15 This would increase the average grant in Washington by $430 in 2008 to $2,860.16 The legislation would also increase the income level at which a student is automatically eligible for the maximum grant award and protect working students by increasing the amount of student income sheltered from the financial aid process.
 
  • Simplify the Financial Aid Process for Low-Income Students. The Act increases the income level at which a student is automatically eligible for the maximum Pell Grant, simplifying the process for low-income students and ensuring such students receive the maximum Pell.
  • Protect Borrowers by Making Student Loan Payments Manageable. The Act caps monthly student loan payments at 15 percent of discretionary income, so that graduates with significant loan debt can better manage their payments, particularly those in lower paying jobs or those supporting children. A social worker with one child in Washington earning $36,990, with average student loan debt of $19,565, would have his or her monthly payments reduced by $51, from $225 to $174, a reduction of 23%.17
 
  • Forgive the Debt of Those Who Commit to Public Service. The Act encourages public service by providing loan forgiveness for borrowers who spend ten years in a public service occupation, such as nursing, teaching, or law enforcement. Under this bill, a starting teacher in  Washington earning $30,974 with the state average loan debt of $19,565 could have loan payments capped at 15% – reducing his or her monthly payments by $65, from $225 to $160, a reduction of 29%.18 After 10 years of teaching, all remaining debt would be forgiven – in this case, a benefit worth $11,162.19
 
  • Protect Working Students. The Act reduces the work penalty on working students, by increasing the amount of student income sheltered from the financial aid process.
 
  • Reform the Student Loan System So It Works for Students, Not Banks. The Act provides all of these new benefits to students at no cost to taxpayers by reducing excessive lender subsidies and redirecting federal aid to students who need it most. The Act includes a critical pilot program that encourages real market competition in the loan programs, so that lenders are not overpaid for the services they provide to students.
 
Impact of Rising College Costs On Washington Students
Despite the Growing Importance of a College Degree, More and More Students and Families are Struggling to Pay for College. A college degree is more important than ever in today’s rapidly changing economy: over 6 out of 10 jobs now require some form of postsecondary education or training.1 Yet rising costs are placing college education out of reach for millions of hardworking American students and families. Years of stagnant federal grant aid have led to increasing numbers of students and their families falling further and further into debt to finance a college education. The Higher Education Access Act of 2007 will bring much-needed relief to students and families in Washington and across the nation.
 
The Cost of College Has Soared, While Median Family Incomes Have Remained Stagnant. Between the 2000-2001 and 2005-2006 school years, the cost of attendance(including tuition, fees, room and board) at four-year public colleges in Washingtonincreased 39%, from $8,917 to $12,384.2  The cost of attendance at four-year privatecolleges in Washington has increased 27%.3 And yet family incomes are not keeping up: median household income in Washington increased just 19% in the same time frame.4 Even after financial aid is taken into account, 31% of the median family income in Washington is needed to pay for just one year of college at a four-year public college.5
 
Federal Student Grant Aid Has Not Kept Up. In Washington, the maximum Pell Grant covered only 33% of the average public four-year college tuition, fees, room and board in 2005-2006 – down from 53% in 1986-1987.6 Nationwide, much of federal spending on student aid has shifted from grants to loans: thirty years ago, 77% of federal aid to students was in the form of grants, and only 20% was in the form of loans. By the 2005-2006 school year, this distribution was reversed to 73% loans, 20% grants.
 
Students are Taking on More Debt to Pay for College. More students are leaving college in debt. In 2004, almost two-thirds of all four-year college graduates nationwide had loan debt, compared with less than a third of graduates in 1993.9 In Washington, 58% of students graduating from four-year institutions in the 2004-2005 school year graduated with debt.10 The average student graduating from a four-year college in Washington that year owed $19,565 in student loan debt.11

These Increased Debt Levels Are Affecting Students’ Career Choices and Life Choices. Nationally, nearly a quarter of public four-year college graduates and over athird of private four-year college graduates have too much debt to afford a startingteacher’s salary.12 For social workers, the numbers are even worse: Over half of thosegraduating from private colleges have too much debt to enter the profession.13 Debt levelsare also causing graduates to delay buying a home or a car and postpone marriage andhaving children.14
 
1 Carnevale, Anthony P. and Donna M. Desrochers, Educational Testing Service, Standards for What? The Economic Roots of K-16 Reform (2003).
2 National Center for Education Statistics, Digest of Education Statistics, 2001 and Digest of Education Statistics, 2006 (preliminary).
3 Id.
4 HELP Committee calculations, based on data from U.S. Census Bureau, Historical Income Tables.
5 National Institute for Public Policy and Higher Education, Measuring Up 2006: The National Report Card on Higher Education (2006).
6 HELP Committee calculations based on cost of attendance data from National Center for Education Statistics, Digest of Education Statistics, 1988 and Digest of Education Statistics, 2006 (preliminary).
7 College Board, Historical Tables on Federal Aid (2006).
8 College Board, Trends in Student Aid (2006).
9 Proportion of graduates from all four-year colleges and universities graduating with debt. Calculations by the Project on Student Debt at the Institute for College Access and Success, ased on data from the National Center for
Education Statistics (NCES), National Postsecondary Student Aid Study (NPSAS), 1993 and 2004 undergraduates, Data Analysis System (DAS).
10 Proportion of graduates from all four-year colleges and universities graduating with debt. Includes only campuses reporting total debt through the Common Data Set initiative. Calculations by the Project on Student Debt using campus data collected from the Common Data Set questionnaire, licensed through Thomson Peterson’s at Thomson Peterson’s Undergraduate Financial Aid and Undergraduate Databases. © 2006 Thomson Peterson’s, a part of
Thomson Learning Inc. All rights reserved.
11 Average debt of graduates from four-year colleges and universities, weighted by enrollment. Includes only campuses reporting total debt through the Common Data Set initiative. Calculations by the Project on Student Debt using campus data collected from the Common Data Set questionnaire, licensed through Thomson Peterson’s at Thomson Peterson’s Undergraduate Financial Aid and Undergraduate Databases. © 2006 Thomson Peterson’s, a part of Thomson Learning Inc. All rights reserved.
12 State PIRGs’ Higher Education Project, Paying Back, Not Giving Back: Student Debt’s Negative Impact on Public Service Career Opportunities (April 2006).
13 Id.
14 Nellie Mae Corporation, College on Credit: How Borrowers Perceive Their Education Debt – Results of the 2002 National Student Loan Survey, (February 2003).
15 HELP Committee estimates, based on data from the National Association of Independent Colleges and Universities and the Congressional Budget Office. Total aid includes projected funding from Pell grant program and funding for Promise grant program provided in HEAA of 2007. Estimates based on proportion of Pell grant aid each state received in award year 2005-2006, the last year for which data is available. Includes estimated aid increases from HEAA provisions that increase the income at which students are automatically eligible for the maximum Pell grant and expanding the income protection allowance for Pell grant eligibility purposes, also based on proportion of Pell grant aid each state received in the 2005-2006 award year. Figures are rounded to the nearest $100,000.
16 HELP Committee estimates, based on data from the National Association of Independent Colleges and Universities, the Congressional Budget Office, and the Congressional Research Service. Total grant increase is calculated based on projected funding from Pell grant program and funding for Promise grant program provided in HEAA of 2007. Estimates based on proportion of Pell grant recipients in each state in award year 2005-2006, the last year for which data is available. Average grants and increases in average grants are rounded to the nearest $10.
17 Calculations by the Project on Student Debt of the Institute for College Access and Success. Assumes loans are unsubsidized loans. Calculations are based on the median salary of a social worker in each state and average student loan debt of graduates in each state. Salary data and poverty rate are adjusted for inflation on an annual basis. Salary data is from Bureau of Labor Statistics, Occupational Employment Data (May 2006). Average graduate debt is from the Project on Student Debt. (See Note 11 for further details on data and source.)
18 Calculations by the Project on Student Debt of the Institute for College Access and Success. Assumes loans are unsubsidized loans. Calculations are based on the starting salary of a teacher in each state in the 2004-2005 school year and average student loan debt of graduates in each state. Salary data and poverty rate are adjusted for inflation on an annual basis. Salary data is from the American Federation of teachers, Survey and Analysis of Teacher Salary Trends 2005. Average graduate debt is from the Project on Student Debt. (See Note 11 for further details on data and source.)
19 Calculations by the Project on Student Debt of the Institute for College Access and Success. Calculations rely on all assumptions described in Note 18, and assume the individual takes advantage of the 15 percent cap on loan payments included in this legislation.
 
 
 
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