September 20, 2007

College Cost Reduction Act – Good, Bad and Ugly

Posted in Legislation Affecting Students, Student Loan News at 8:23 AM by Joe From Boston


Savannah Now has a great article summarizing how the new legislation affects students.  Not everyone will reap the rewards – indeed, many will now end up paying more.  Read the excerpt below:

The Good

Pell Grant increases and related benefits to Pell recipients.

Broader eligibility for Academic Competitiveness Grants.

Student income protection allowance increase.

Automatic zero expected family contribution income increase.

Lowering out-of-pocket costs to families.

Reduced rates on Stafford Loans.

Lender subsidy reductions.

Student loan forgiveness benefits.

Student loan deferment benefits for veterans.

Perkins Loan program continuation.

More awareness of the true cost of college.

Additional college grant aid for Pell recipients in co-op educational programs.

New TEACH Grant program.

Additional funding for historically black colleges and universities and minority-serving institutions.

New College Access Challenge Grant program.

Restoration of funding for Upward Bound projects.

The Bad

Other than a subsidized Stafford Loan rate reduction, millions of non-Pell Grant recipients are left with few alternatives.

Student-owned 529 Savings Plans will no longer be exempt from assessments.

There is no provision for families who don’t qualify for need-based financial aid.

Rates for Stafford Loans not subsidized by the government will not decrease.

The Ugly

If the 2008 budget cuts to pay for the above benefits are implemented, the Supplemental Educational Opportunity Grant will no longer exist, and millions of the neediest students will be left behind.

Stafford Loan increases for first- and second-year students from $2,625 to $3,500 and $3,500 to $4,500 will actually benefit colleges, as they will reduce the institution’s portion of aid dollar-for-dollar and save the school an additional $1,875 over two years.

You can read the entire article here.

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6 Comments »

  1. “I study myself more than any other subject; it is my metaphysic, and my physic.”

  2. Hi Jon,

    Well, you’ve got a host of issues, so I’m going to tackle a few of them. Regarding your education, was it relatively recent? What I’m getting at is, could you take a few more classes at a local community college and finish your degree? That would help you get a higher paying job and pay off your loans more easily.

    Regarding the harassing phone calls, document everything. Record them if you can, and tell the person at the other end you are recording. Collections agencies aren’t supposed to harass or threaten, but they often do.

    Now, it sounds like your loans are in default, which is VERY bad as it can ruin your credit. Try calling your loan company and ask to come to an agreement over a repayment plan. Remember, in the long run they want you to pay them back – they want their money back – and if you simply stop paying they will eventually garnish your wages. Try to come to an agreement with them that will at least get you back on track. It won’t be easy. If you’ve stopped paying your loans, the lender now has good reason not to trust you, so you’ll have to demonstrate good faith to repay.

  3. John Kisida said,

    I became physically disabled in 2,000, and was also a dislocated worker. I was accepted by VRD (vocational rehabilitation division-Oregon) I decided to go back to school and VRD guaranteed that they would help me with financial obstacles and provide me with a PC. None of the above ever happened as a matter of fact they prevented me from completing my goal of getting an education.. I have many learning disorders and ADHD and PTSD so the school would not test, or accommodate me nor would VRD. VRD said it was the schools reasonability and the school said it was VRD’s responsibility. VRD insisted I take out a student loan because they were out of funds. Not I owe EDFUND $20, 0000 and no education. I am a single parent and don’t have a foot to stand on and EDFUND is harassing me to the point that it paralyzes me from thinking of a way out of this mess. What do you recommend I do? John

  4. Hi Clay,

    From what I understand, and I could be wrong, you will not get any rate reductions. I believe it only affects Stafford Loans disbursed in the future. It does not address private loans at all.

    On a personal note, let me congratulate you on getting an 8.25% interest rate on your private loans – that is VERY low for a private loan, you’re quite lucky. I know people paying over 13% on their private loans (they pay prime +5).

  5. Clay said,

    I have a question regarding the College Cost Reduction Act. I am a recent college graduate and have consolidated all of my loans. I now have two loans under one company. My interest rate for my private loan is prime (8.25%). And I pay an interest rate of 6.25% for my other. Will this Act of 2007 help reduce these interest rates that I pay now?

  6. […] Original post by moniqueleonard […]


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