Invest the bill's savings in making college affordable and helping more Americans graduate

• Invests $40 billion to increase the maximum annual Pell Grant Scholarship to $5,550 in 2010 and to $6,900 by 2019. Starting in 2011, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index plus 1 percent. About 6 million students received the Pell Grant scholarship in 2007-2008.
  

• Invests $3 billion to bolster college access and completion programs for students. It will increase funding for the College Access Challenge Grant program, and will also fund innovative programs at states and institutions that focus on increasing financial literacy and helping retain and graduate students.
  

• Strengthens the Perkins Loan program, a campus-based program that provides low-cost federal loans to students, by providing the program with more reliable forms of credit from the federal government and expanding the program to include significantly more college campuses. Last year approximately 495,000 students received a Perkins Loan.
  

• Keeps interest rates low on need-based (or subsidized) federal student loans by making the interest rates on these loans variable beginning in 2012. These interest rates are currently set to jump from 3.4 percent to 6.8 percent in 2012. Nationwide about 5.5 million students borrow these loans every year.

• Makes it easier for families to apply for financial aid by simplifying the FAFSA form. Building on proposals recently put forth by the Obama Administration, the legislation will dramatically cut down the number of questions on the form by allowing students and families to apply for aid using the information on their tax returns. In 2003-2004, over 1.5 million college students who likely were eligible to receive Pell Grants didn't apply for financial aid because they found the FAFSA form too confusing.

• Invests $2.55 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate.
  

Provide reliable, affordable, high-quality federal student loans for all families

• Converts all new federal student lending to the stable, effective and cost-efficient Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through lenders subsidized by taxpayers in the federally-guaranteed student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to low-cost federal college loans, in any economy.

• Provides all federal student loan borrowers with upgraded, modern, state-of-the-art customer service. Rather than force private industry out of the system, the bill will forge a new public-private partnership that provides all borrowers with the highest-quality customer service when repaying their loans and maintains jobs. It will establish a competitive bidding process that allows the U.S. Department of Education to select lenders based on how well they serve borrowers, educate them financially, and pervent loan defaults. It will provide a role for non-profits to continue servicing student loans.

Prepare students and workers for 21st century jobs by providing all Americans with the skills and resources they need to compete

• Build a 21st century workforce by encouraging historic partnerships between community colleges, states, businesses, job training and adult education programs. The bill would create a new competitive grant program for community colleges to improve instruction, work with local employers, improve their student support services, and implement other innovative reforms that will lead to a college degree, certificate, or industry recognized credential to help fulfill local workforce needs.
  

• Expands access to education by supporting free, high-quality, online training, high school and college courses. The U.S. Department of Education would be authorized to make competitive grants available to eligible colleges, workforce programs, or other entities to help support the development of these courses.
  

• Ensures that community college students can learn in modern, updated, state-of-the-art facilities by renovating campuses in need of repair.

Meet pay-as-you-go fiscally responsible principles and reduce the deficit

• Saves taxpayers $87 billion over ten years by switching to the cheaper Direct Loan program, according to the Congressional Budget Office. In addition to investing in college aid, this legislation will also direct $8 billion in savings back to the U.S. Treasury to help pay down the deficit.