News Releases

Murray Applauds Student Loan Changes that Will End Big Bank Subsidies, Help Washington State Students Afford College

Jul 01 2010

NEW LAW TAKES EFFECT TODAY: $61 billion saved through the elimination of wasteful federal subsidies, directs funding to increases in Pell Grants, increased access to student loans

(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) applauded the arrival of major investments in higher education support for students and families in Washington state and an end to student loan subsidies for big banks. Senator Murray worked hard for these changes, which were included in the Health Care and Education Reconciliation Act signed into law on March, 30, 2010.

“Starting today, students across Washington state are going to start seeing the benefits of  the new law that puts their education needs above big bank profits,” said Senator Patty Murray.  “I was proud to fight for these changes because I know how important Pell Grants and student loans are for students who dream of a college education. Without the help of Pell Grants and student loans, my six siblings and I would never have been able to go to college.”

As of today, all colleges and universities participating in federal student loan programs will be required to offer all new loans through the Federal Direct Loan Program. The Direct Loan program is a more reliable lender for students and more cost-effective for taxpayers. In total, changes to the student loan program will create $61 billion in savings by eliminating the need for wasteful government subsidies to commercial lenders.

Additional benefits of the bill include the investment of $523 million over 10 years to increase Pell Grants for Washington state students and allow them more direct access to student loans. In total, the bill increases the maximum Pell Grant scholarships available to $5,550 in 2010 and $5,975 by 2017. 

Washington state benefits:

  • $464 million in additional Pell Grant funding for Washington state over 10 years.
  • Washington state minority serving institutions would receive an increase in funds of nearly $50 million.
  • This bill would provide an additional $10 million in funding for Washington state College Access Challenge Grants, which help states increase the number of low-income students prepared to enter and succeed in college.
  • Monthly student loan payments will be more manageable for low- and middle-income borrowers.  Monthly payments will be capped at 10% of a borrower’s salary, and would forgive any remaining debt after 20 years.

Washington state students should got to http://studentaid.ed.gov/ for more information.