College Cost Reduction and Access Act of 2007

The College Cost Reduction and Access Act of 2007, which provides the single largest investment in higher education since the GI bill, was signed by President Bush on September 27, 2007. The Act's intent is to make a college education more affordable for low- and middle-income families. The Act reduces lender subsidies and invests those funds in programs that support expanded access to federal financial aid, increased grant awards, reduced student loan interest rates, and expanded loan repayment options. Unless otherwise noted, provisions in the Act will be effective October 1, 2007. Key provisions include:

1. Reduction of interest rates on subsidized undergraduate Stafford loans–The interest rate on subsidized undergraduate Stafford loans is reduced as follows:
   • 6.8% for loans first disbursed on or after July 1, 2006 and before July 1, 2008
   • 6.0% for loans first disbursed on or after July 1, 2008 and before July 1, 2009
   • 5.6% for loans first disbursed on or after July 1, 2009 and before July 1, 2010
   • 4.5% for loans first disbursed on or after July 1, 2010 and before July 1, 2011
   • 3.4% for loans first disbursed on or after July 1, 2011 and before July 1, 2012

2. An increase in the Pell Grant--The annual Pell Grant is increased as follows:
   • 2008/2009 academic year: $4,800
   • 2009/2010 academic year: $4,800
   • 2010/2011 academic year: $5,000
   • 2011/2012 academic year: $5,000
   • 2012/2013 academic year: $5,400

3. Student loan payments made more manageable for borrowers by:
   • Guaranteeing that borrowers won't have to pay more than 15% of their discretionary income toward loan repayments
   • Allowing borrowers who show economic hardship to have their loans forgiven after 25 years
   • Allowing borrowers to have their loans forgiven after 10 years of public service
   • Expanding the loan deferments available to certain members of the Armed Forces

4. Increased eligibility for federal financial aid through an increase in the income protection allowance granted to all students in the needs analysis formula.

5. Upfront tuition assistance for qualified undergraduates who commit to teaching in public schools in high-poverty communities or high-need subject areas.

6. A new partnership among federal, state, and local governments and philanthropic organizations to encourage their participation in college financing and to award matching Challenge Grants aimed at increasing the number of first generation low-income college students.

7. New investments in minority-serving institutions, namely, Historically Black Colleges and Universities, Hispanic-Serving Institutions, Tribal Colleges, Alaska Native and Native Hawaiian Institutions, Predominantly Black Institutions and Asian American and Pacific Islander Institutions.

RPS is a registered investment advisor for Virginia, Maryland, and the District of Columbia. This web site is not a solicitation to sell investment advisory services outside those areas, except where such registration is not required. This site is for information only and should not be construed as a vehicle to deliver advice for any investor or individual. RPS delivers advice only after we provide clients a copy of our registration document (FORM ADV) and our contract has been executed. Information throughout this site pertaining to market or other financial data is obtained from sources that RPS considers reliable. RPS does not warrant or guarantee the timeliness or accuracy of this information. References made to investment or portfolio performance are based on historical data, and there is no guarantee of such performance in the future.