Every year, some 200,000 students do not go to college in America solely because they can't afford the cost. The College Cost Reduction and Access Act passed by Congress provides the financial assistance that students and families need to bridge the divide in enrolling in higher education.
This legislation, which was signed into law in September, provides the largest increase in college financial aid since the GI Bill of Rights of 1944, helping millions of African American students and families pay for college – and doing so at no new cost to U.S. taxpayers.
In today's economy, a college education is as necessary as a high school diploma was a generation ago. Yet college costs have grown nearly 40 percent in the last five years. Students are graduating from college with more debt than ever before. And many would-be students are holding off on going to college, or skipping it altogether, because they don't believe they can afford it.
This new investment in college financial aid is critical for African American students and their families. African American students represent 12 percent of the overall undergraduate population.
The College Cost Reduction and Access Act increases college financial aid by more than $20 billion over the next five years. This law pays for itself by cutting excessive federal subsidies paid to lenders in the college loan industry by $20.9 billion.
To reduce the cost of loans for millions of student borrowers, this law has cut interest rates in half on need-based student loans, from 6.8 percent to 3.4 percent over the next four years, affecting the 38 percent of African American students that take out need-based loans each year. Once fully phased in, this will save typical student borrowers $4,400 over the life of the loan.
In addition, this law prevents students from facing unmanageable levels of federal student debt by guaranteeing that they will never have to spend more than 15 percent of their yearly discretionary income on loan repayments.
The act also includes a number of other provisions.
• Invests $510 million over the next five years in Historically Black Colleges and Universities,
• Creates a new designation of predominately Black institutions.
• Provides up-front tuition assistance of $4,000 per year – for a maximum of $16,000 – for excellent undergraduate students who commit to teaching in public schools in high-poverty communities or high-need subject areas.
• Encourages and rewards public service by providing loan forgiveness after 10 years of public service and loan payments for military service members, first responders, law enforcement officers, firefighters, nurses, public defenders, prosecutors, early childhood educators, librarians, and others.
The College Cost Reduction and Access Act is one of the most critical laws to come out of the 110th Congress – making college more affordable and accessible for millions of African American students, strengthening our workforce and stimulating our economy.
U. S. House Speaker Nancy Pelosi is a Democrat from California.