U.S. Rep. Lloyd Doggett, D-Texas, announced a new program aimed to make federal student loans more affordable.
Nationwide, 5.5 million students take out subsidized loans each year. Doggett’s program, announced last week, would allow these students to cap their monthly loan payments at 15 percent of their discretionary income. Certain eligible low and moderate-income students would also be able to take out new federal student loans at a lower interest rate and receive larger Federal Pell Grant scholarships.
“I think this program will benefit everyone no matter how much money you make after you graduate,” said Bobby Frey, UT mechanical engineering senior.
The benefits are all a part of the College Cost Reduction and Access Act, which Doggett helped enact in 2007 under the new Democratic Congress. The legislation has invested $20 billion in college aid for families at no additional cost to tax payers.
Interest rates dropped on July 1 from 6 percent to 5.6 percent. This is the second of four annual cuts and the interest rate will continue to drop until it reaches 3.4 percent in 2011.
“It’s always good to have lower interest rates,” Frey said. “It will definitely allow people to save some money.”
About 6 million students receive the Federal Pell Grant scholarship each year. Funding from The College Cost Reduction and Access Act and the American Recovery and Reinvestment Act will increase the maximum Pell Grant scholarship to $5,350, more than $600 above last year’s award.
With this program, college graduates and workers of any age who enter into public service professions will have their federal college loans completely forgiven after ten consecutive years of service and loan repayment. Eligible public servants include firefighters, public defenders and prosecutors, paramedics, law enforcement officers, early childhood educators and men and women serving in the military.
“I think it’s great that this program has certain benefits for police, paramedics and other public servants,” said Tyler Hemphill, a 2009 criminal justice graduate from St. Edwards University. “It will entice college graduates and help to build a higher educated police force. I think it is a good offer and definitely something I would look into.”
Recent events indicate Americans’ interest in public service may be on the rise. This year’s applications for programs like Teach for America and AmeriCorps have increased by 42 percent and 200 percent, respectively.
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