WASHINGTON, DC - Rhode Island's middle class and low-income families will see an $85 million increase in need-based grant aid over the next five years and a reduction in half of the interest rate on new student loans over four years as part of a sweeping college aid bill signed into law today.

"I am pleased that this landmark legislation to help put college within reach for more deserving students has become law," said U.S. Senator Jack Reed (D-RI), a senior member of the Health, Education, Labor, and Pensions (HELP) Committee and member of the conference committee that developed the legislation. "This legislation will provide an immediate financial boost to thousands of deserving students in Rhode Island and will help millions of students and their families nationwide pay down their student loans."

The bill increases the maximum Pell Grant, the primary need-based federal grant for students, from $4,050 to $5,400 by 2012 - an increase of more than 25 percent over the next five years. Pell Grants are named after former Rhode Island Senator Claiborne Pell.

The College Cost Reduction and Access Act of 2007 also includes provisions to stem the increasing numbers of middle-class families falling further into debt to finance a college education. In Rhode Island, 61 percent of students graduating from four-year institutions in the 2004-5 school year graduated with debt averaging over $20,000 per student.

"Too many students graduating from college are facing the daunting prospect of paying back thousands of dollars in student loans, often taking years to pay back," said Reed. "We must help our young people get their degrees without being over-burdened by their student loans. This new law will go a long way towards helping hardworking students and their families secure a brighter future."

The legislation phases in a lower interest rate on new subsidized Stafford loans to undergraduate students, reducing the rate in half over four years from 6.8 percent to 3.4 percent. It seeks to protect borrowers by capping monthly loan payments at 15 percent of their discretionary income. The bill also provides loan forgiveness to students who continue in public-service professions for 10 years, including teachers, nurses, and librarians.

Also included in the new law are provisions authored by Senator Reed to make it easier for more students to qualify for student financial aid.

With an estimated 12,000 Rhode Island students graduating high school this year, Reed's measure will ensure that all students from families with incomes of $30,000 or less will receive a maximum Pell Grant. Currently, only families making $20,000 or less automatically qualify for such grants. The provision not only increases the number of low-income students eligible for need-based aid, but also simplifies the financial aid process by providing such students with early information and assurances of financial aid for college.