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Students having trouble paying for college may find relief under Governor Baldacci’s new plan to expand Pell Grants. Coupled with new proposals passed by the House of Representatives in Washington, D.C., most students will be repaying less loan money after graduation than they anticipated.
Baldacci’s plan would allow for up to $2,000 granted by the state to students who are residents of Maine and already receive federal Pell Grants. Maine residents will not pay for this program through tax increases.
Instead, funds will be taken from proposed cost-cutting measures, which include increasing the number of students considered acceptable in Maine’s middle and high school classes and increasing the size of school districts. This measure is expected to result in the loss of 600 teachers in affected schools.
For college students in Maine, the change is likely to be a welcome relief. As recently as 2003, the state of Maine was ranked seventh to last in terms of college affordability, though it emerged as the most affordable in New England. As of 2005, 92 percent of students received some sort of financial aid, and 49 percent received federal grants, including Pell rants.
For students with subsidized or need-based loans, the proposal by the federal House of Representatives will have a tangible impact as well. The proposal would cut interest rates on college loans in half – from 6.8 percent interest today to 3.4 percent interest in 2011.
After six months fixed at 3.4 percent, the interest rate would revert to 6.8 percent unless extended by another law. Students who graduate with $20,000 in loans would save approximately $3,000, lowering monthly student loan payments by $30 a month.
While this bill was approved by the House of Representatives as a piece of the new Democratic leadership’s “First 100 Hours” plan, it has yet to pass the Senate or the remote possibility of a presidential veto.
Senator Ted Kennedy [D - Massachusetts] will use the House resolution to launch his own proposal to increase the maximum federal Pell Grant from $4,050 to $5,100.
Bangor Daily News