Wednesday, March 31, 2010

PA Education Benefits in Health Care Bill

from the inbox:

The Health Care and Education Reconciliation Act of 2010 delivered a significant down payment on the President’s ambitious agenda to make higher education more affordable and help more Americans earn a college degree. The law raises the maximum Pell Grant, makes loan payments more affordable for students with unmanageable debt, increases investments in community colleges, and extends support for Historically Black Colleges and Universities and other Minority Serving Institutions, all at no additional cost to taxpayers according to the non-partisan Congressional Budget Office. The education initiatives funded by the law are fully paid for by ending government subsidies that were being given to financial institutions making guaranteed federal student loans.

Building on existing accomplishments since the President took office—raising the maximum Pell Grant by more than $800 and tripling the largest college tax credit now known as the American Opportunity Tax Credit—the Health Care and Education Reconciliation Act will help expand college access and increase graduation rates for Pennsylvania’s students.

To support Pennsylvania’s students’ success in higher education, the new law:

Increases Pell Grants: The Health Care and Education Reconciliation Act invests more than $40 billion in Pell Grants to ensure that all eligible students receive an award and that these awards will be increased in future years to help keep pace with the rising cost of college. These investments, coupled with the President’s previous investments, more than double the total amount of funding provided for Pell Grants since the President took office. The law increases the Federal Pell Grant maximum award by the Consumer Price Index from 2013 through 2017, which is estimated to raise the award from $5,550 to $5,975, according to the non-partisan Congressional Budget Office. By academic year 2020-2021, the Department of Education estimates Pennsylvania’s students will receive an additional $324 million in Pell Grants due to the changes in the new law.

Expands Income Based Repayment: Because of the high cost of college, about two-thirds of students take out college loans with an average student debt of over $23,000. This debt is particularly burdensome for graduates who choose to enter lower-paying public service careers, suffer setbacks such as unemployment or serious illness, or fail to complete their degree. To ensure that Native Americans can afford their student loan payments, the Health Care and Education Reconciliation Act makes the existing income-based student loan repayment program more generous for new borrowers after July 1, 2014. They will be allowed to cap their student loan repayments at 10 percent of their discretionary income and, if they keep up with their payments over time, forgive their balance after 20 years. As under current law, public service workers—such as teachers, nurses, and those in military service—will see any remaining debt forgiven after only 10 years. According to Department of Education estimates, 1.2 million borrowers are projected to qualify and take part in the expanded IBR program between 2014 and 2020.

Increases Support for Minority Serving Institutions (MSIs): While many of today’s colleges and universities are facing a host of challenges—shrinking endowments, decreasing state appropriations, deteriorating facilities and increasing costs—many of America’s Minority Serving Institutions are feeling the pain more acutely. They do more with less and enroll higher proportions of low- and middle-income students. That’s why the Health Care and Education Reconciliation Act provides $2.55 billion to Historically Black Colleges and Universities and Minority Serving Institutions over the next ten years. These dollars can be used to renew, reform, and expand programming to ensure that students at these colleges and universities are given every chance to live up to their full potential. HBCUs and MSIs in Pennsylvania will be eligible to receive an additional $19 million in funding under the new law.

Funding for College Access Grants: The Health Care and Education Reconciliation Act extends and increases mandatory funding for the existing College Access Challenge Grant Program to $150 million per year over the next four years. This program provides grants to States to help organizations provide services that increase the number of low-income students who are prepared to enter college and manage their student loans, such as by developing financial literacy and debt management skills. Pennsylvania is expected to receive approximately $20 million in additional funding due to the changes in the new law.

Investments in Community Colleges & Career Training: As the largest part of the nation’s higher education system, community colleges enroll more than 6 million students and are growing rapidly. They feature affordable tuition, open admission policies, flexible course schedules, and convenient locations. Community colleges are particularly important for students who are older, working, or need remedial classes. Community colleges work with businesses, industry and government to tailor training programs to meet economic needs like nursing, health information technology, advanced manufacturing, and green jobs. The Health Care and Education Reconciliation Act includes $2 billion over four years for community colleges. These resources will help community colleges and other institutions develop, improve, and provide education and career training programs suitable for workers who are eligible for trade adjustment assistance. Each state will receive at least 0.5 of the total funds appropriated to this program each fiscal year.

Ultimately, the education related provisions of the Health Care and Education Reconciliation Act are fully paid for by ending the government subsidies currently given to financial institutions that make guaranteed federal student loans. Starting July 1, all new federal student loans will be direct loans delivered and collected by private companies under performance-based contracts with the Department of Education. According to the Congressional Budget Office, ending these wasteful subsidies frees up nearly $68 billion which this new law reinvests back into students and into reducing the deficit. As a result of the savings and investments in this new law, Pennsylvania and its students are expected to receive more than $365 million by academic year 2020-2021 in additional benefits for higher education.

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