Under the bill, Pell Grant scholarships would jump by $500 over the period. When combined with other Pell scholarship increases passed or proposed by Congress this year, the maximum Pell Grant would reach $4,900 by 2008 and $5,200 by 2011, up from $4,050 in 2006.
In addition, interest rates for need-based student loans would be cut in half, from 6.8 percent to 3.4 percent in equal steps over the next five years. A typical student borrower -- with $13,800 in need-based student loan debt – would save about $4,400 over the life of the loan. Need-based loans are made to about 6.8 million students every year.
The College Cost Reduction Act of 2007 was approved 30 to 16 by the House Education and Labor Committee last week and can now be scheduled for consideration by the full House of Representatives later this summer.