Making college more affordable
Earning a college degree is an important and increasingly necessary stop on the way to a successful career for young people here in Michigan and across the country. Students with a bachelor’s degree will earn 70 percent more on average than those with only a high school diploma, which translates to $1 million over the course of a lifetime. That gap becomes $3.7 million when comparing a high school diploma with a professional degree.
At the same time, paying for a college education has become a daunting task. In Michigan, the cost of one year at a four-year public college jumped 39 percent between the 2000-01 and 2005-06 school years to more than $13,500. That puts a huge strain on the family budget, especially when federal student aid programs have been largely stagnant.
Even when low- and middle-income students succeed in making ends meet and get their degree, they often graduate with a huge financial burden. Six in 10 college students in Michigan graduate with student loan debt, and for many students the growing cost of tuition has pushed their loans to unprecedented levels.
To help bridge this gap, Congress recently passed the largest federal investment in higher education since the GI Bill. This legislation — the College Cost Reduction and Access Act — will provide a boost to students and families who are struggling to meet the rising costs of postsecondary education.
This much-needed legislation significantly expands the federal Pell grant program, which helps thousands of students in Michigan pay for college every year. It increases the maximum grant to $5,100 next year and $5,400 by 2012 from just $4,050 last year and increases the top income level at which a student is eligible for the maximum grant. These changes would bring an additional $80 million to Michigan next year and an additional $689.6 million over the next five years.
This legislation also helps to direct resources to the schools that are most in need. The new TEACH Grant program will provide $4,000 per year scholarships to top-notch college students who commit to teaching critical subjects in high-need schools after graduation. An additional $500 million will also be invested in colleges and universities that provide underserved populations with the chance to earn a degree.
For graduates facing student loan debt, this legislation reforms the student loan system to ease the burden on student borrowers. Interest rates will be cut in half to 3.4 percent for undergraduate students with subsidized loans. In addition, monthly student loan payments will be capped at 15 percent of the borrower’s discretionary income so students no longer have to decide between buying groceries and paying off their loans. And students will be encouraged to give back to the community: federal student loans will be forgiven after ten years of service in public sector jobs such as teaching, nursing or law enforcement.
To see how these changes will help, consider a recent graduate in Michigan who accepts a teaching position with a starting salary of $35,557 and student loans totaling $18,942, both state averages. His or her monthly loan payment would be reduced by 29 percent. After ten years of teaching the remaining federal debt would be forgiven, a benefit worth more than $10,000. These changes will provide a manageable way for students to borrow money for their education and pay it back.
With so much at stake, we in Congress have a responsibility to help make a college education attainable for every American. The legislation passed by Congress, which the President is expected to sign into law, is a victory for students and families.
