In a not-too-surprising announcement after all the recent bad news about student loan firms—and in an apparent “victory” for both Bush and Congress—the White House said today that President Bush intends to sign into law a bill that reduces federal subsidies to those firms, including Sallie Mae, by $20.9 billion over the next five years, and will instead use that money to increase funding for Pell Grants (which recipients don’t have to pay back).
Current Pell Grants top out at $4050, but the bill will gradually increase that to $5400 by 2012. The bill will also temporarily reduce interest rates on need-based student loans from 6.8 percent to 3.4 percent over the next four years (the reduction will expire two years after that).
“Lawmakers to Cut Subsidies To Student-Loan Providers” [Washington Post]
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