Sunday, December 18, 2005

Merry Xmas, Student Borrowers

The latest on the student loan bills.

From the state PIRGs:

The House and Senate budget conferees returned a bill with a net cut of $12.7 billion to the student loan programs. Rather than cutting lender subsidies, the bill derives approximately 70% of its savings from higher loan interest rates for borrowers and redirecting excessive student and parent payments to private lenders. While Congress directs several billion dollars to pay for grant aid and some student borrower benefits, the bulk of the cuts will be sent out of the program to pay for tax cuts for the wealthiest Americans.

From Representative George Miller's office:

Over the next five years the bill raises $14.9 billion from excessive student and parent interest payments and higher interest rates on parent loans. This figure includes about $13 billion in excessive payments made by student and parent borrowers. Under current law, when borrowers pay more than a fair market rate on their college loans, lending institutions are allowed to keep this windfall, even though it represents excessive payments made by student and parent borrowers. Rather than return these excessive interest payments to student and parent borrowers, this budget bill simply shifts them to pay for additional tax breaks for the wealthy.

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