The Senate early this morning approved legislation that would provide $17 billion in additional college aid to students, including $39 million in additional Pell Grants for Vermont students.
"Putting money into higher education is not a cost, it is an investment," said Senator Bernie Sanders, a member of the Senate education committee. "Despite the growing importance of a college degree, rising costs are placing college education out of reach for too many hardworking Vermont students and families," he added.
The Higher Education Access Act of 2007, approved by a vote of 78-to-18, would increase grants to low-income students, raise the number of students eligible for the maximum Pell Grant, decrease the penalty for students who work and receive financial aid, make loan repayment more manageable for borrowers with significant loan debt, and forgive the debt of many of those who pursue public service careers.
Sanders played a major role in developing the loan forgiveness program for college graduates who stay in public service jobs - including nursing, education, and law enforcement - for a decade.
The legislation also would:
• Increase the maximum Pell grant to $5,100 next year, and to $5,400 by 2011. This means low-income Vermont students would be eligible for an additional $4.1 million in need-based grant aid next year, and an additional $34.9 million over the next five years. The change would increase the average grant in Vermont by $440 in 2008 to $2,910.16 The legislation also would increase the income level at which a student is automatically eligible for the maximum grant award and protect working students by increasing the amount of student income sheltered from the financial aid process.
• Cap federal student loan payments at 15 percent of a borrower's discretionary income, bringing needed relief to students with excessive loan burdens. For example, a social worker with one child in Vermont earning $36,730, with average student loan debt of $19,482, would have his or her monthly payments reduced by $50, from $224 to $174, a reduction of 23 percent.
As things now stand, nearly a quarter of public four-year college graduates and over a third of private four-year college graduates leave school with too much debt to afford working at a starting teacher's salary. For social workers, the numbers are even worse.
Under the legislation, a Vermont school teacher, for example, could significantly lighten the load of college loans. A typical beginning teacher earning $26,461 with the average Vermont loan debt of $19,482 could have loan payments during the first decade after graduation capped at 15 percent of the teacher's discretionary income. That would reduce monthly payments by $85 or 38 percent. Then, after 10 years of teaching, all the remaining debt would be forgiven. That benefit would be worth $14,052 to the Vermont teacher.
Soaring college costs are the backdrop for the legislation. Between the 2000-2001 and 2005-2006 school years, the cost of college at four-year public colleges in Vermont increased 29 percent from $12,836 to $16,571.2 The cost of four-year private colleges in Vermont has increased 30 percent.
Even after financial aid is taken into account, 41 percent of the median family income in Vermont is needed to pay for just one year of college at a four-year public college. A big part of the reason is that federal student aid has not kept up with rising tuition and other costs.
In Vermont, the maximum Pell Grant covered only 24 percent of the average public four-year college tuition, fees, room and board in 2005-2006 - down from 30 percent in 1986-1987.6 Nationwide, much of federal spending on student aid has shifted from grants to loans: thirty years ago, 77 percent of federal aid to students was in the form of grants, and only 20 percent was in the form of loans. By the 2005-2006 school year, this distribution was reversed to 73 percent loans, 20 percent grants.
As a result, more students are leaving college in debt. In 2004, almost two-thirds of all four-year college graduates nationwide had loan debt, compared with less than a third of graduates in 1993. In Vermont, 67 percent of students graduating from four-year institutions in the 2004-2005 school year graduated with debt.10 The average student graduating from a four-year college in Vermont that year owed $19,482 in student loan debt.
Soaring college debts also are affecting career choices. Student loan debts also are causing graduates to delay buying a home or a car and postpone marriage and having children.
The measure now goes to a conference committee to work out differences with a version approved by the House of Representatives.
For a fact sheet on the bill, click here.
To see how senators voted, click here.
To watch video from the press conference click here.