What's New

Student Aid Reform: On March 25th, Congress voted to make historic investments in financial aid by ending sweetheart deals with big banks and lenders. The passage of H. R. 4872, the Health Care and Education Affordability Reconciliation Act, is a game-changing bill that will finally give breathing room to students drowning in debt.

The money saved from cutting lender subsidies constitutes the largest single investment into the Pell Grant program our country has ever seen. This $36 billion investment increases Pell Grant funding at a time when tens of millions of students are making tough college financing choices that could mean dropping out of college. The bill also expands the Income Based Repayment program which will allow over one million additional students the ability to manage their debt load after graduation.

CLICK HERE to see the student activism from across the country that helped build support for this bill.

Among other things, the bill reinvigorates the Pell Grant program, which provides need-based aid to over seven million college students, raising the Pell Grant maximum to $5,975 by 2017 for students who need it, and guaranteeing that the grant amount will increase thereafter on a yearly basis by the cost of living after 2013.

^{U.S. PIRG Higher Education Associate Rich Williams addressed hundreds at a Lexington Institute policy forum on the future of financial aid on Nov. 10. Mr. Williams addressed how students will be affected by the changes in the Student Aid and Fiscal Responsibility Act, recently passed by Congress.}

^{View the full Lexington Institute policy forum video.}

Overview

For-profit colleges and student debt: The Student PIRGs are playing a key role efforts by the U.S. Department of Education to set rules for the for-profit colleges. Learn more.

Private loans: On Dec. 11, 2009, the House of Representative passed a bill to create the Consumer Financial Protection Agency (CPFA). U.S. PIRG ensured that private student loans are regulated under the CFPA, but the bill still needs to pass the Senate. Read more about private loans. 

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The nation’s social, civic and economic health relies on the number of students who can attain a college degree. Over the past decade, though, states have cut college budgets, and grant aid for students has stagnated. The number of college students graduating with over $25,000 in student loan debt has tripled in the last decade while 400,000 qualified students drop out of the application process annually due to cost.  

President Obama’s budget transforms the federal financial aid system. By cutting excessive lender subsidies and investing instead in the federal financial aid system, students and families will not only receive a significant boost to need-based aid, they will be able to count on that aid year in and year out. Specifics include:

1. Investing $42 billion to make permanent the temporary boost in Pell grant funding achieved in the economic recovery package, and it stabilizes the funding by increasing the grant at inflation + 1% each year from 2011 on.

2. Making permanent the changes to the HOPE higher education tax credit from the economic recovery package, increasing the credit from $1,800 to $2,500 and expanding it to cover key educational costs like textbooks. The renamed American Opportunity Tax Credit also makes up to $1,000 of the credit refundable, enabling 3.8 million families of current high school students from low-income families to use it.

3. Providing a $5 billion increase to Perkins student loan aid which will benefit 2.7 million additional students.

4. Creating a five year, $2.5 billion federal-state partnership to increase graduation rates.

The President’s plan helps to pay for these changes with a $24 billion investment generated by eliminating inefficiencies within the Stafford and PLUS student loan programs, freeing up more taxpayer dollars to go toward the proposed aid programs.