[Congressional Record Volume 153, Number 19 (Wednesday, January 31, 2007)]
[Senate]
[Pages S1430-S1431]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS:
  S. 454. A bill to provide an increase in funding for Federal Pell 
Grants, to amend the Internal Revenue Code of 1986 in order to expand 
the deduction for interest paid on student loans, raise the 
contribution limits for Coverdell Education Savings Accounts, and make 
the exclusion for employer provided educational assistance permanent, 
and for other purposes; to the Committee on Finance.
  Ms. COLLINS. Mr. President, I rise today to introduce the Improving 
Access to Higher Education Act. This legislation would provide an 
increase in the maximum Pell grant award to $5,100, as well as 
additional benefits to help make higher education more accessible and 
affordable.
  Our system of higher education is, in many ways, the envy of the 
world, but its benefits have not been equally available. Unfortunately, 
family income still largely determines whether students will pursue 
higher education. Students from families with incomes above $75,000 are 
more than twice as likely to attend college as students from families 
with incomes of less than $25,000.
  To help remedy these inequities, the Federal Government has committed 
itself to a need-based system of student financial aid designed to help 
remove the economic barriers to higher education. Central to this 
effort over the past 30 years has been the Pell grant program.
  The Pell Grant Program is the largest source of Federal grant aid and 
the cornerstone of our Federal need-based aid system. In 2006, the Pell 
program provided approximately $13 billion in grant aid to more than 
5.3 million students. Students with the greatest need receive the 
maximum Pell award, which is currently set at $4,050. And Pell grants 
are truly targeted to the neediest of students--Pell recipients have a 
median family income of only $15,200.
  Because of the central role of the Pell Grant Program, I am deeply 
concerned by the significant erosion in the purchasing power of the 
Pell grant that has occurred in recent years. In 1975, the maximum Pell 
grant represented approximately 80 percent of the costs of attending a 
public, 4-year institution. Today, it covers only 33 percent of these 
costs.
  When lower levels of grant aid are available, students are forced to 
make up the difference by taking on larger and larger amounts of debt 
to finance their education. Earlier this month, I met with two students 
from the University of Southern Maine who told me that students 
graduating from 4-year institutions in Maine leave with an average debt 
of $20,239. As startling as this figure may be, it underestimates the 
true indebtedness of students, since it does not take into account 
credit card debt or private loans that students use to help finance 
their education.
  The decline in the value of grant aid and the growing reliance on 
loans have particularly negative consequences for low-income students. 
In fact, the staggering amount of debt required to finance higher 
education may force some low-income students to abandon their plans to 
attend college altogether.
  As explained in a recent report by the Educational Policy Institute, 
``Grants for Students: What they do, Why they work,'' people from 
lower-income backgrounds often place a higher value on having money to 
meet pressing current needs, and accordingly, are less likely to make 
investments where the financial return comes only in the long term. 
According to the report, ``[L]ong term poverty encourages short-term 
thinking and those who experience it tend to identify very strongly 
with the expression `one in the hand is worth two in the bush.' '' This 
is just one reason why the availability of loans does not solve the 
college access problem for low-income students, and why grant aid is so 
crucial.
  That is why today I am introducing legislation that will raise the 
maximum Pell grant award to $5,100, an increase of more tha $1,000 in a 
single year. While I recognize that this represents a significant 
increase in a single year, this increase is long overdue. The maximum 
grant award has been essentially level-funded since Fiscal Year 2002. 
If we do not act soon Fiscal Year 2007 will become the fifth year in a 
row that the Pell maximum award has been level-funded.

  By raising the maximum award to $5,100, my home state of Maine will 
receive approximately $60 million in Pell grant funding, an increase of 
over $15 million from current levels. This level of funding would 
provide Pell grants to more than 20,000 Maine students.
  I recently met with Andrew Bossie, a first-generation college student 
from my hometown of Caribou, about the importance of Pell grants. 
Andrew is currently a student at the University of Southern Maine and 
will graduate this spring, in large part, because of the help of Pell 
grants. As Andrew told me, ``Without Pell grants, there is no doubt 
that I would not have been able to attend college. Although the current 
Pell grant award is a huge help, I still feel the stress of sometimes 
having to decide between a badly-needed new pair of shoes and making my 
tuition payments.'' Andrew is thriving academically--he is on the 
Dean's list--and he is also the student body president and is active as 
a community volunteer.
  Increasing the maximum Pell award by $1,050 is going to make a real 
difference for Andrew and other students in their ability to pursue 
their college dreams. While I recognize that an increase to $5,100 in a 
single year is an ambitious goal, it is a worthy one for a nation that 
understands the opportunities that a college education brings.
  My legislation also amends the Higher Education Act to raise the 
minimum Pell award to $500, up from the current minimum of $400. The 
minimum award level has not been increased in over 10 years. I believe 
we should ensure that every student who qualifies for a Pell receives 
at least $500.
  In addition to our efforts on behalf of Pell grants, there are other 
important steps we can take to put higher education in the reach of 
more families. Ten years ago, in my first year as a Senator, I 
introduced S. 930, the ``College Affordability and Access Act,'' which 
contained three provisions designed to expand access to higher 
education, and reduce its cost. These three provisions were enacted 
into law, in amended form, as part of the Taxpayer Relief Act of 1997.
  The proposal I am submitting today builds upon each of those three 
provisions. First, in recognition of the increased cost of higher 
education, my proposal calls for an increase in the tax deduction 
available for interest paid on higher education loans. Second, my 
proposal calls for a similar increase in the contribution limit for 
tax-free Coverdell Education Savings Accounts. Third, the bill would 
make permanent the current tax-free treatment of employer-provided 
educational assistance programs.
  The value of the tax relief we provided 10 years ago has not kept 
pace with the rising cost of higher education. According to data from 
the College Board, 4-year private colleges now charge $30,000 per year 
for tuition, fees, room, and board. Even after taking inflation into 
account, this represents an increase of more than $6,000 since the 
1996-1997 school year. Perhaps even more troubling, the College Board 
reports that the rate of increase has actually been sharper at public 
4-year institutions than their private counterparts. Ten years ago, 
students attending any of America's excellent public universities would 
have paid, on average, just over $9,000 to cover tuition, fees, room, 
and board. Today, these

[[Page S1431]]

students can expect to pay nearly $12,800--an increase of 38 percent 
after taking inflation into account.
  By contrast, the student loan interest deduction we provided as part 
of the Taxpayer Relief Act of 1997 remains at $2,500. It is time that 
we raise this cap to $3,750, a 50-percent increase. Doing so is a step 
toward recognizing that investments in higher education are essential 
to the health of our economy in an increasingly global, competitive 
marketplace.
  I also believe it is necessary to increase the contribution limits 
for Coverdell Education Savings Accounts. Under current law, taxpayers 
may make contributions of up to $2,000 per year to these tax-free 
higher education accounts. In light of the inflation in college costs 
that I have already described, I believe this contribution limit ought 
to be increased to $3,000 per year.
  Finally, my proposal would also extend current education benefits 
provided to employees through their employers. Under current law, a 
taxpayer may receive, tax free, up to $5,250 in education benefits 
through their employers each year. This provision helps both companies 
and their employees. Companies that provide this benefit get a 
workforce that is current with the latest methods and technologies in 
the field, while their employees get the training they need to advance 
through the ranks. Unfortunately, this provision expires on December 
31, 2010. I propose that it be made permanent.
  Now is the time for us to make a commitment to raising the Pell 
maximum award to $5,100, and to providing additional relief to families 
struggling to afford higher education. Investing in higher education is 
crucial to our economic future and competitiveness in the global 
economy, and my legislation represents a sound investment towards 
making the dream of a college education a reality for more Americans. I 
hope my colleagues will join me in supporting this legislation.
                                 ______