November 9, 2007
Congress passes College Cost Reduction Act (H.R.2669)
This September, the College Cost Reduction Act (H.R.2669) was signed into law and will allow student borrowers to choose their career paths without being unduly influenced by debt burdens. The Act will also permit governmental and non-profit organizations to retain talented professionals who would otherwise be forced to resign in search for higher-paying jobs.
H.R. 2669 seeks to lower the cost of higher education by reducing lender subsidies by $19 billion. Funds will instead be invested in programs that increase grant amounts to students, improve access to and cut interest rates on student loans, and reward colleges for lowering costs to students.
The current legislation improves upon an “income-contingent repayment (ICR) option” introduced by President Clinton and Congress in 1993. At first glance, the ICR plan seemed to respond to the needs of high-debt/low income borrowers; it lowered monthly payments, and it provided for eventual forgiveness of debt. However, according to Professor Philip G. Schrag of Georgetown University, almost no law graduates voluntarily elected ICR for two reasons. First, most borrowers were leery because they would have to make payments on their student loans for 25 years and would still be repaying their own loans when their children were enrolling in college. Second, only government-guaranteed and government-extended loans were eligible for ICR repayment and eventual forgiveness.
With the new act, Congress will significantly reduce the period after which public servants’ educational loans are partly forgiven. It also reduces monthly payments for all high debt/low income borrowers, supplementing the income-contingent loan repayment program with a new “income based” repayment (IBR) program.
These new provisions will significantly help law students and lawyers who desire public interest careers, but the Act’s benefits are not limited to public interest lawyers. They will also help all high debt/lower income borrowers to pursue long-term public service careers in many different fields of work, including teaching, social work, military service, nursing, disability assistance and emergency management.
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