Making College More Affordable and Accessible for America's Families


August 10, 2000

Today, President Clinton will announce new steps to make college more affordable for students and parents, and to allow graduates to choose rewarding careers. First, he will announce two new steps by the U.S. Department of Education to lower interest rates on direct student loans for students who meet their responsibilities by repaying their loans on time. These changes will save students and parents $600 million, and save federal taxpayers $5 million, over the next five years. Second, he will announce that the Clinton-Gore Administration is proposing a new rule to ease college debt for teachers in lower-income communities. Finally, he will call on Congress to enact his proposals to strengthen education and make college more affordable, including the College Opportunity Tax Cut, which will especially help middle-class families.

PRESIDENT CLINTON WILL ANNOUNCE TWO STEPS TO LOWER INTEREST RATES ON DIRECT STUDENT LOANS. New incentives will reward students who repay their loans on time. Together with other interest rate and fee reductions since the start of the Clinton-Gore Administration, these incentives will save students as much as $1,300 on $10,000 in loans.

These new repayment incentives will:

THE PRESIDENT ALSO WILL PROPOSE A STEP TO EASE COLLEGE DEBT FOR TEACHERS IN HIGH-NEED COMMUNITIES. Today, the U.S. Department of Education will propose a new rule providing loan forgiveness for teachers in lower-income areas that have trouble retaining teachers. The new rule — which implements a provision of the Higher Education Amendments of 1998 — would forgive up to $5,000 in loans after five consecutive years of teaching in needy schools, at least one of which must have been 1998-99 or later. Through 2003, over 25,000 teachers will receive $122 million in loan forgiveness. Teachers must not have had either: 1) outstanding student loans on October 1, 1998, or 2) outstanding loans when they obtained new loans after October 1, 1998. This policy will help today’s students afford college, become teachers in needy areas, and stay for at least five years. The final rule is expected to take effect on July 1, 2001.

EIGHT YEARS OF STUDENT LOAN REFORM. Today’s announcement builds on eight years of effort to reform the student loan program and create more opportunities for college. The Clinton-Gore record includes:

CALLING ON CONGRESS TO INVEST IN AMERICA’S EDUCATION PRIORITIES. In February, the Clinton-Gore Administration sent Congress a balanced and responsible budget that made investments in key education initiatives to expand college opportunity, raise standards, and invest in what works. However, the Republican budget:

Meanwhile, the tax cuts passed by the Congress this year would drain more than $900 billion of the surplus. Together with the substantial tax cuts supported by the Congressional Majority, this would return America to deficits and leave no money for key priorities. At the same time, the Congressional budget would cut domestic priorities $28 billion below the President's level, an average cut of 9 percent.

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