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One of my top priorities in Congress has been increasing access to quality, affordable education. To make our region competitive in the global economy, we must invest in our workforce, starting with pre-K and continuing through college and community college. That’s why I was proud to support the Student Aid and Fiscal Responsibility Act, which was included in the health care reconciliation bill that was signed into law on March 30, 2010. This measure will make college more affordable and at no cost to taxpayers by making common-sense reforms to the federal student loan system.
This law represents the single largest investment in federal student aid, including $67,132,849 in the 5th District of Virginia, and $555,271,936 in the state of Virginia over 10 years to increase the maximum annual Pell Grant scholarship to $5,550 in 2010 and to $5,975 by 2017. Starting in 2013, the scholarship will be linked to match rising costs-of-living by being indexed to the Consumer Price Index. Increasing the Pell Grant scholarship will allow more young people to attain that dream of attending college or community college.
The measure will also help more young Americans graduate by investing $750 million to bolster college access and completion support, resulting in $11,200,155 over the next five years in Virginia for students. It will increase funding for the College Access Challenge Grant program and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
The law makes federal loans more affordable for borrowers to repay by investing $1.5 billion to strengthen an Income-Based Repayment program that currently allows borrowers to cap their monthly federal student loan payments at 15 percent of their discretionary income. These new provisions would lower this monthly cap to just 10 percent for new borrowers after 2014. The law also invests $52,590,870 in Virginia’s Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate.
Along with making college more affordable, this law will invest funds specifically in workforce development, as it invests $2 billion in a competitive grant program for community colleges to develop and improve educational or career training programs. And because all new federal student loans will be originated through the Direct Loan program—instead of through the federally guaranteed student loan program—as of July 1, 2010, the law will also help keep jobs in America. Lenders will compete for contracts to service these loans, guaranteeing borrowers high-quality customer service. And, as opposed to loans made by banks, Direct Loans can only be serviced by workers in the United States. Last year, for instance, Sallie Mae brought 2,000 jobs back to the United States to win a direct loan servicing contract. Sallie Mae is now one of four private banks servicing 4.4 million direct loans.
Besides the educational and job-creating benefits this law offers, I am also pleased to report that it is fiscally responsible. It meets Pay-As-You-Go (PAY-Go) principles and will save taxpayers $61 billion over the next 10 years by switching to the cheaper Direct Loan program, according to the nonpartisan Congressional Budget Office. In addition to investing in college aid, these provisions will also reduce the deficit by at least $10 billion over 10 years.
Please feel free to contact me to share your concerns and ideas. You may call 1-888-4-TOM4US (1-888-486-6487); write to 1520 Longworth House Office Building, Washington, DC 20515; or visit www.perriello.house.gov to sign up for my weekly e-newsletter.