WASHINGTON, DC - By a vote of 79-12 the U.S. Senate passed a bipartisan, landmark education bill this morning that halves interest rates on loans to college students, increases grant assistance, and makes it easier for more students to qualify for financial aid.

"I am pleased the Senate passed this important bill to help put college within reach for more deserving students," said U.S. Senator Jack Reed (D-RI), a senior member of the Health, Education, Labor, and Pensions (HELP) Committee and member of the Conference Committee that developed the legislation. "It will provide an immediate financial boost to thousands of deserving students in Rhode Island and will help millions of students and their families pay down their student loans."

Lowering Interest Rates for Middle Class Families
The College Cost Reduction and Access Act of 2007 includes provisions to stem the increasing numbers of middle-class families falling further into debt to finance a college education. The legislation phases in a lower interest rate on new subsidized Stafford loans to undergraduate students, reducing the rate in half over four years from 6.8 percent to 3.4 percent. It seeks to protect borrowers by capping monthly loan payments at 15 percent of their discretionary income. The bill also provides loan forgiveness to students who continue in public-service professions for 10 years, including teachers, nurses, and librarians.

In Rhode Island, 61 percent of students graduating from four-year institutions in the 2004-5 school year graduated with debt averaging over $20,000 per student.

"Too many students graduating college are facing the daunting prospect of paying back thousands of dollars in student loans, often taking years to pay back," said Reed. "We must do what we can to help our young people get their degrees without being over-burdened by their student loans. This bill will go a long way to helping hardworking students and their families secure a brighter future."

Increasing Pell Grants
This legislation provides nearly $20.2 billion in additional student aid to students and their families including an additional $7.8 million in need-based grant aid for Rhode Island students next year and nearly $85 million in the next 5 years. It also increases the maximum award of Pell Grants next year by $500 and will increase the grants to $5,400 by 2012. That increases the average grant in Rhode Island by $360 in 2008 to $2,880.

The Pell Grant is named after former Rhode Island senator Claiborne Pell.

"Pell Grants are a key source of funding for students who have the talent but not the financial means to go to college," said Reed. "We must ensure that these grants keep up with the ever-increasing cost of college. I am pleased that my colleagues have recognized the importance of increasing funding for this essential program."

Simplifying the Financial Aid Process
Also included in the legislation are provisions from Senator Reed's Financial Aid Form Simplification and Access (FAFSA) Act (S. 939) to make it easier for more students to qualify for student financial aid.

With an estimated 12,000 Rhode Island students graduating high school this year, Reed's provision will simplify the financial aid process for low-income students by raising the Automatic-Zero Expected Family Contribution threshold to $30,000. Reed's provision will ensure that all students from families with incomes of $30,000 or less will receive a maximum Pell Grant. Currently, only families making $20,000 or less automatically qualify for such grants. The provision not only increases the number of low-income students eligible for need-based aid, but also simplifies the financial aid process by providing such students with early information and assurances of financial aid for college. This automatic-eligibility level would also be tied to the Consumer Price Index to ensure that the benefit keeps pace with inflation and does not become diluted.

Reed also authored a provision in the legislation to reduce the penalty faced by students when they work in order to pay for college. This provision doubles the Income Protection Allowance for dependent students from $3,000 to $6,000 over four years and increases the Income Protection Allowance for independent students, including adult learners and veterans, by 50 percent over four years. These increases will protect students who have to work during college so they can earn more without having it count against their financial aid.

"This bipartisan legislation tackles the twin goals of access and affordability for students and families and helps ensure that our nation remains competitive in today's global economy," concluded Reed.

The House is expected to pass the bill later today and the President has stated his intent to sign the legislation into law.