Dick Durbin: Durbin Bill to Cut Student Interest Rates in Half Goes to President for Signature

September 14, 2007 -- [CHICAGO, IL]- Student interest rates are on track to be cut in half as a result of legislation written by U.S. Senator Dick Durbin (D-IL) and included in the College Cost Reduction Act of 2007 that was passed by the House and the Senate last week and sent to the President, who is expected to sign the bill into law in the coming days.

“This bill may be the most important piece of legislation that we pass this year,” said Durbin. “We give a lot of speeches on the Senate floor about how much we love this country and how much we want it to succeed, but the real test here is whether or not we are prepared to invest in our children. This bill invests in our kids by giving them the one thing in America that gives you a chance to succeed - an education.”

Article continues below...

In July 2006, interest rates increased to 6.8 percent for students with subsidized loans, which go to students with the most financial need. Durbin’s bill, written in partnership with U.S. Congressman George Miller (D-CA), was first introduced in the 109th Congress in April of 2006. Specifically, the Durbin-Miller legislation, now included in the College Cost Reduction Act of 2007, will cut interest rates on need-based federal loans for undergraduate students from 6.8 percent to 3.4 percent over the next four years.

The College Cost Reduction Act of 2007 cuts lender subsidies and provides an additional $20.2 billion in college financial aid – the largest increase since the G.I. bill. In Illinois over the next five years, the bill will mean $836 million of new grant aid for students and $376 million of new loan aid.

The bill also increases the maximum Pell Grant by $500 next year and to $5,400 by 2012; caps federal student loan payments at 15 percent of a borrower’s discretionary income; and forgives the debt of borrowers who continue in public service careers for 10 years.

Source: Senator Dick Durbin