Pew Commends New Law That Caps Student Loan Payments and Promotes Family Financial Security
The following statement is in response to President George W. Bush signing into law H.R. 2669, the College Cost Reduction and Access Act:
“Today's action is good news for the nation and helps ensure that tomorrow's workforce will be both better-prepared to compete economically and more financially stable. The specter of unmanageable student debt has undermined the ability of too many young people to go to college, save for retirement, buy a home and start a family. It has also prevented a growing number of college graduates from pursuing teaching, nursing, social work and other crucial but frequently lower-paying professions. By incorporating income based repayment, this sound legislation assures past, present and future students who have federal loans that their payments will be fair and manageable and will not extend indefinitely. Further, by reducing unnecessary lender subsidies and using the savings to increase Pell grants, the law will help more students avoid debt as they pursue higher education.
“The President and Congressional leaders have shown the kind of bipartisan policy leadership that must be part of solving a host of tough national problems. Today's bill is a major advance and we look forward to working on further efforts to help Americans save for tomorrow and manage debt today.”
In 2005, The Pew Charitable Trusts helped launch the Project on Student Debt at the Institute for College Access and Success as part of a major initiative to strengthen family financial security. Some of the project's innovative policy solutions are incorporated into the bipartisan legislation that President Bush signed today, including an Income Based Repayment program, which is modeled on the Project on Student Debt's Plan for Fair Loan Payments. Additionally, the law will redirect taxpayer subsidies away from student loan companies and toward increased grant aid by providing additional funding to increase the maximum Pell grant.