House-Senate deal reached on college aid [View All]

Source: Associated Press

House-Senate deal reached on college aid
By NANCY ZUCKERBROD, AP Education Writer
28 minutes ago



WASHINGTON - House and Senate negotiators reached a deal Wednesday to boost aid to college students by cutting roughly $20 billion in government subsidies to banks that issue student loans.

Under an agreement reconciling differences between House and Senate bills, the maximum Pell grant, which goes to the poorest students, would increase from $4,310 to $5,400 by 2012.

The legislation also would cut interest rates on federally backed student loans to poor and middle-class students from 6.8 percent to 3.4 percent over the next four years.

House Democrats pushed for an interest-rate cut, following up on campaign promises. Such a provision had not been included in the Senate-passed version of the bill.

Democratic lawmakers said the $20 billion in cuts were aimed at excessive government subsidies to the industry. The subsidies were established to ensure banks enter the college loan business.





Read more: http://news.yahoo.com/s/ap/20070905/ap_on_go_co/student_loans