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Washington, D.C.—Today, Congressman Elijah E. Cummings (Md.-07) announced a new program to make college loans more affordable to repay by allowing borrowers to establish income-based caps on their monthly loan payments and by reducing interest rates and increasing Pell Grants for qualified low- and moderate-income students.
“There is absolutely no excuse for a young person to be denied an education because he or she can’t afford it, but more than 200,000 students miss out on college each year for this very reason,” Congressman Cummings said. “Education is a right, not a luxury, and my colleagues and I in the Congress are doing everything we can to keep the high cost of college from acting as a roadblock to our children’s futures.”
The new benefits that go into effect today will allow borrowers to participate in a new income-based repayment program that caps monthly loan payments at just 15 percent of their discretionary incomes (defined as 15 percent of what a borrower earns above 150 percent of the poverty level for the size of his or her family). After 25 years in the program, a borrower’s remaining loan balances—including interest—will be completely forgiven.
The Congressman also announced today that new funding allocations combined with boosts from the American Recovery and Reinvestment Act will increase the maximum Pell Grant scholarship for the 2009-2010 school year by $600 to $5,350. Additionally, the interest rate on subsidized federal student loans will decrease today from 6 percent to 5.6 percent, the second of four annual cuts to reach 3.4 percent by 2011.
“These new benefits help clear the path for our nation’s neediest families to achieve the American Dream of receiving a college education,” Congressman Cummings said. “We must ensure that every child has the opportunity to make this dream a reality.”
The new benefits announced today are all part of the College Cost Reduction and Access Act, which was enacted in 2007 under the new Democratic Congress. The legislation, which invested more than $20 billion in college financial aid—including more than $370 million for Maryland families—at no additional cost to taxpayers, was the single largest investment to help pay for college in more than 60 years.
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