Annual Benefits for Student Loans Start this Month

Congressman Brian Higgins (NY-27) is reminding students that new benefits commence today for student loans which make college more affordable.  Through the College Cost Reduction and Access Act, the federal interest rate dropped from 6% to 5.6%—the second of four annual cuts in this interest rate.  By July 1, 2011, all undergraduate students awarded a federal loan will receive a fixed interest rate of 3.4%.

“Investing in the economic success of our student population enables America’s economic revitalization and success,” said Congressman Higgins.  “This law provides new hope and opportunity not just for the students and their families but the entire nation.”

This year the benefits initiate a new Income-Based Repayment program which caps borrowers’ monthly loan payments at 15% of their discretionary income.  The program offers great flexibility and peace of mind for new graduates who face hefty student loan debt and a challenging economic climate.  In addition, the law includes an increase in Pell Grant scholarships by more than $600 to $5,350, which will affect about 6 million students.

In April 2009, Congress passed and the President signed The Edward M. Kennedy Serve America Act—the largest expansion of national service.  Since then AmeriCorps experienced a 204% surge in applications.  As interest in civic service grows, the College Cost Reduction and Access Act also encourages service by providing $4,000 a year TEACH Grants for students who commit to teaching high need subject areas for four years after graduation.

Annually, over 5.5 million students take out need-based federal student loans. The College Cost Reduction and Access Act will provide significant savings for these college students. Starting in 2008, an estimated $2,660 will be saved by the average four year college student over the life of the loan.

In 2007, Congressman Higgins supported and the 110^th Congress passed the College Cost Reduction and Access Act which set aside an additional $20 billion in federal student aid without any new costs to taxpayers—the largest investment in student financial aid since the G.I. Bill in 1944.  For more information on the new benefits visit the Department of Education and Federal Student Aid website at http://studentaid.ed.gov/.

New education benefits are also available to veterans through the GI Bill for the 21^st Century approved by the House on June 19, 2008.   Service members may receive benefits for education pursued on or after August 1, 2009.  Benefits are generally effective for up to 15 years following the release of active duty. The benefits are disbursed on a sliding scale based on time served.  For details on the new GI Bill or to apply for a certificate of eligibility visit the Department of Veterans Affairs website at www.gibill.va.gov.

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