Friday, January 05, 2007

Deets on New Congress Cutting Yr Student Loans

I just got this press release from George Miller, your man on the House Education & Labor Committee. They are planning to cut student loan interest rates as part of the Democrats' "first 100 hours of Congress" gimmick. For some reason, they are doing it in five steps:

On Wednesday, January 17, 2007, the House of Representatives will consider legislation to cut interest rates in half on federal college loans. Specifically, the legislation will cut interest rates on need-based federal loans for undergraduate students from 6.8 percent to 3.4 percent in five steps: to 6.12 percent in 2007; 5.44 percent in 2008; 4.76 percent in 2009; 4.08 percent in 2010; and 3.40 percent in 2011.
Once fully implemented, these cuts will save the typical borrower - with $13,800 in need-based loan debt - approximately $4,400 in interest costs over the life of his or her loan.

I liked this part:

Why making college more affordable for America's students is a top priority
With the cost of college skyrocketing in recent years, there is no question that our nation is facing a serious crisis in college affordability. ..This is the first time in America's history that an entire generation has had to go deeply into debt in order to attain a college degree.

Many would-be students - as many as 200,000 per year, according to past estimates from the U.S. Department of Education - choose to delay or forego attending college because they can't afford it. This is unfair to them and, because college graduates open businesses and create jobs, it is bad for our economy
and our country's future.


Anonymous said...


Can you please explain why this release says that cutting interest rates will lead to more costs for the government? Is it because the government has guaranteed to subsidize lenders if the interest rate drops below a certain level? I thought the 9.5% loophole was eliminated. If the government will incur extra costs by reducing the interest rate, why will the government not be able to pass legislation to also reduce their own costs and reduce their subsidies for lenders? That goal is just as important as lowering costs for students. Thanks.

Anonymous said...

Will the interest rate reductions apply to people like myself who have been in repayment status for about five years and who "locked in"/consolidated at a rate of 6.5% before the rates hit the ridiculous lows of like 3% a few years ago before they started creeping back up?