(Washington, DC) - Under the College Cost Reduction and Access Act of 2007, which Congressman Baron Hill supported, new student loan benefits will go into effect tomorrow, July 1, 2009. 

“Given our current economic situation, these enhanced benefits are particularly important and timely,” Hill said.  “A lot of students have to incur significant debt in order to attend college, but these new benefits will make student loan payments manageable for millions of Americans.”

The new benefits going into effect July 1 include:
„Ï Cheaper interest rates on need-based (subsidized) federal student loans. On July 1, the interest rates on subsidized federal student loans will decrease from 6 percent to 5.6 percent. This is the second of four annual cuts in this interest rate; it will continue to drop until it reaches 3.4 percent in 2011.

„Ï Reasonable and affordable monthly college loan payments for borrowers. On July 1, a new Income-Based Repayment program will go into effect that caps borrowers’ monthly loan payments at just 15 percent of their discretionary income (15 percent of what a borrower earns above 150 percent of the poverty level for their family size). Any current or future borrower whose loan payment exceeds 15 percent of their discretionary income is eligible. After 25 years in the program, borrowers’ debts will be completely forgiven.

„Ï Higher Pell Grant scholarships that cover the average tuition at public universities. Due to funding provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act, the maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350 – more than $600 above last year’s award.

In addition, students and borrowers will be able to continue to take advantage of other recent programs enacted under the law. To encourage more students to become teachers, the law provides up-front tuition assistance, known as TEACH Grants, of $4,000 a year – for a maximum of $16,000 – to students who commit to teaching high need subject areas in high need schools for four years after graduation. Graduates who enter into public service careers, such as teachers, public defenders and prosecutors, firefighters, nurses, non-profit workers and more, will be eligible for complete loan forgiveness after 10 years of qualifying public service and loan payments.

“Nationwide, about 5.5 million students borrow need-based federal student loans each year,” Hill said.  “I was proud to support this bill and pleased to see how significantly it will assist those seeking to better their lives and careers.”