Senate Passes Student Loan Reform

Early today, the United States Senate approved the Higher Education Access Act of 2007 with a veto-proof bipartisan vote of 78 to 18. Like H.R. 2669 which passed the House last week, this bill includes an increase in Pell grants and a new Income Based Repayment plan, based on our Plan for Fair Loan Payments.

Income Based Repayment will allow past, present and future borrowers to cap federal student loan payments at a reasonable percentage of his or her income and cancel any remaining debt after 25 years of repayment.

The passage of this critical legislation by both houses of Congress is a major step in the right direction to reduce the risks and burdens of student debt. We encourage the leadership of the House and Senate to preserve these key provisions in conference committee, and the President to waste no time signing the bill into law.

See Project executive director Robert Shireman’s statement on today’s vote.

Consumers Union Urges Better Information for Prospective Borrowers

A new report from Consumers Union, publishers of Consumer Reports, finds that students and parents don’t have the information they need to make wise choices about the best way to pay for college. The report provides important policy recommendations to improve information and disclosures about college financing options, including:

Requiring colleges to use standardized definitions and formats in financial aid award letters to disclose the cost of attendance, the financial aid offered, and the costs associated with various types of loans, enabling students and families to more easily compare costs and awards from different colleges.

Requiring lenders to provide – in plain language – the rates and terms of a private educational loan earlier in the application process so that families can shop around for the best-priced loan.

Requiring that students receive annual financial aid counseling before loan funds are disbursed, rather than just at the beginning and end of college.

Read the report, Helping Families Finance College: Improved Consumer Disclosures and Counseling.

(This announcement was sent to the Project on Student Debt mailing list on July 20, 2007.)