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“Today Congress voted to make historic investments into financial aid by ending sweetheart deals for big banks and lenders. This is a game-changing bill that banishes banks from the federal student loan program while aiding students mired in education debt.
“This investment increases Pell grant funding at a time when tens of millions of students are assuming record levels of debt to pay for college. The number of students graduating with over $40,000 in loan debt has increased ten-fold in the last decade. A massive $36 billion infusion into the need-based Pell grant program will provide immediate relief to student borrowers. Not only are Pell grants stabilized for over eight million students, the aid is increased substantially over the next 6 years. The bill also expands on the Income Based Repayment program making loan repayment more manageable for graduates, benefits that will extend to over one million more borrowers.
“One of the best things about this bill is that it doesn’t cost taxpayers a dime. For years, the federal government has been funding middlemen lenders to make loans to students. These lenders make federal loans at almost zero risk and full profit, while providing no tangible benefits to students. Instead, all federal lending will occur through the efficient and effective Direct Loan program.
“The federal Direct Loan program will increase student protection from aggressive private loan marketing. Lenders used inducements to convince financial aid offices to push private student loans on students and families. These private loan products are more akin to credit cards with variable interest rates as high as 18% and limited repayment options and benefits. Originating loans from the federal government will give the time students need to assess their financing options in a fair setting.
“This legislation helps renew the promise of student aid programs for the tens of millions of students who rely on grants and loans to achieve a college education. We applaud Congress for prioritizing the Pell grant program, and education, and we look forward to President Obama’s final signature.”
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