College Cost Reduction Act “Soft” on Low-Income Students

The College Cost Reduction Act of 2007 passed the House and Senate, but is likely to be hung up with negotiations before it hits President Bush’s desk. Bush has threatened to veto the new measure due to the flimsiness of the bill in regards to low-income students. Many politicians have talked up the bill’s success, but much of this is marketing rhetoric.

As it currently stands, the College Cost Reduction Act is more oriented to post-college individuals, less focused on current students and those most challenged to get a college degree.

The biggest winners are the Pell Grant recipients—they will likely receive a significant boost in funds, although still far short of the funds once available only a few decades ago.

The bill cuts major subsidies to student loan lenders that offer the FFEL program. This action seems almost a reprimand for the past months’ worth of controversy brought on by unscrupulous and greedy lenders.

Components of the CCR Act:

• Pell Grants will be increased from $4,050 to $4,900 and a maximum $5,200 by 2011.
• Students pursuing a teaching profession stand to earn full tuition compensation in exchange for service in underrepresented schools. This takes calculated aim at the problem of inadequate teachers in poor schools.
• Forgiveness of student loans owned by public service professionals, including law enforcement, firemen, nurses, and even librarians after 10 years.
• $500 million in new investments to minority and underrepresented institutions.
• Student loan interest cuts for need-based loans.
• Federal student loan maximum borrowing limits to be increased.

“Drug Provisions” Remain Uncertain

Part of the proposed amendment to the Higher Education Act still faces an uncertain future. Currently any student convicted of a drug offense is summarily denied government aid regardless of how trivial the offense. Some sources suggest that the number of students affected by this controversial contingency is well over 100,000.

The FAFSA form requires applicants to answer the “drug conviction” question.

This “drug offense” measure was zipped onto the Higher Education Act of 1965 as the Aid Elimination Provision of 1998, also called the Souder Amendment.

It’s no secret that the average college graduate accumulates thousands of dollars in student loan debt. With some financial aid decreasing and tuition increasing, the future college graduate has to wonder if he or she can indeed make those loan payments on their beginning post-college salary.

While various entities and organizations address the problem of affordable higher education on a fairly consistent basis, some are offering innovative methods with which to accomplish the goal.

Just last month, a new loan forgiveness program for Iowa teachers who teach in critical shortage areas such as math, science and special education was unveiled. This program, the third such program for which Iowa teachers can qualify may forgive up to $9,000 in student loans over a period of five years. It’s called the Iowa Student Loan Teacher Educational Loan Forgiveness Program and has been implemented by a non-profit organization that uses interest income from student loans to benefit students.

According to the Des Moines Register, an Iowa teacher that qualifies for all 3 loan forgiveness programs could have as much as $30,500 over five years in student loans forgiven.

An article in the Stanford Report on October 4th, and picked up by the Associated Press the following day, highlights a new loan forgiveness program. The Stanford Teacher Education Program (STEP) is a Master’s program that will forgive half of a student’s loan after teaching for 2 years and the full amount after teaching for four years.

Student’s who qualify for the STEP program could receive up to $65,000 in loans and other aid to cover program and other expenses, including living expenses.

Stanford University is matching a $10 million dollar gift from an alumna to fund this program. The only criteria, as far as where a teacher must teach in order to qualify for the program, seems to be somewhere between the grades of Kindergarten and the twelfth grade for public school teachers and underserved communities for private school teachers.

Although it may be tempting to pursue such a career specifically to benefit from loan forgiveness, it may be best summed up by one Drake University student who plans on teaching English and therefore would not qualify for Iowa’s loan forgiveness program. “Teaching is a passion,” she states, “You have to love what you do. You don’t want to go into it just because they’re going to pay off all my loans.”