Thursday, August 10, 2000
When we open the doors of college, we open the doors of opportunity; we give people the chance to live out their own dreams. And in the process, we strengthen our nation and our ability to contribute to the progress of the entire world
President Bill Clinton
August 10, 2000
Today, in Chicago, Illinois, President Clinton announced new steps to make college more affordable for students and parents, and to ease college debt for teachers in high-need communities. First, he announced that the Department of Education will lower interest rates on direct student loans for students who repay their loans on time, saving students and parents $600 million and taxpayers $5 million over the next five years. Second, he announced a new proposal to ease college debt for teachers in lower-income areas. The President called on Congress to enact his proposals to strengthen education and make college more affordable, including the College Opportunity Tax Cut. Today's announcement builds on the Administration's eight years of efforts to reform the student loan program and create more opportunities for college.
LOWERING INTEREST RATES ON DIRECT STUDENT LOANS. The President announced two new incentives to reward students who repay their loans on time:
- New Interest Rebate. Beginning this academic year, students and parents borrowing direct student loans will receive an immediate interest rebate equal to 1.5 percent of the loan. The average undergraduate could save $150 on $10,000 in loans.
- New Refinancing Opportunity. Beginning in October, students who consolidate their loans with the Direct Student Loan program will receive a new interest rate that is 0.8 percentage points lower than what they currently pay, saving a student with $10,000 in loans over $500.
Students must make their first 12 payments on time to keep these benefits. Together with other interest rate and fee reductions since the start of the Clinton-Gore Administration, students can now save as much as $1,300 on $10,000 in loans. These new repayment incentives will:
- Encourage on-time loan payments;
- Save undergraduate and graduate students hundreds of dollars; and
- Save taxpayers $5 million over five years.
EASING COLLEGE DEBT FOR TEACHERS IN HIGH-NEED COMMUNITIES. The Department of Education is proposing a new rule to provide loan forgiveness for teachers in lower-income areas that have trouble retaining teachers. The new rule would forgive up to $5,000 in loans after 5 consecutive years of teaching in high-poverty schools. Through 2003, over 25,000 teachers will receive $122 million in loan forgiveness.
CALLING ON CONGRESS TO INVEST IN AMERICA'S EDUCATION PRIORITIES. President Clinton urged Congress to pass a budget that makes investments in key education initiatives. The current Republican budget:
- Excludes the College Opportunity Tax Cut, which would allow families to deduct up to $10,000 in tuition from their taxable income;
- Denies 600,000 disadvantaged students mentoring, academic support, and college preparation through GEAR UP;
- Does not fund the President's teacher quality proposal;
- Reneges on the bipartisan commitment to reduce class size by hiring 100,000 new teachers;
- Fails to strengthen accountability and turn around failing schools;
- Denies after-school learning opportunities to over 1 million children; and
- Ignores the urgent need to build and modernize 6,000 schools and make emergency repairs to another 25,000.