Democrats push to lower the interest rate on student loans
The first female Speaker of the House has proved to be a mover and a shaker. Nancy Pelosi, D-Calif., has passed six bills through the House of Representatives within her first two weeks of taking control.
One highlight of the Democratic agenda is to make higher education more affordable. Pelosiâ€™s initial plan was passed through the House at alarming speed, which was a bill that is proposed to gradually cut the interest rate on federally subsidized student loans in half. The interest rate on federally subsidized student loans is now 6.8%; Pelosi plans to cut that to 3.4% over the next five years.
A federally subsidized student loan is a need based-loan. The lender takes into account the cost of tuition, board and living expenses. An unsubsidized loan is not based on need.
The bill was widely popular receiving a 356-71 vote. Democrats voted 232-0, while Republicans voted 124-71. During Pelosiâ€™s â€œfirst hundred hours,â€ she has passed the
aforementioned six bills at an intense pace.
The student loan bill was rushed through the opening days of congress without hearings, debate or committee authorization.
The student loan bill is expected to get caught up in the Senate where Democratic Senators plan to make the bill more comprehensive.
The proposal will only drop the interest rate on federally subsidized student loans to 6.12% on loans taken out after July 1, 2007. Two years from now (Jan. 2009) the interest rate will have dropped to 4.76%. Only 29% of students taking out federal loans will be eligible for the breaks that this bill offers.
â€œI would rather see them make money available that is not a loan,â€ said Director of Financial Aid Lisa Siudym.
One of the main criticisms of this proposal is that it does nothing to slow the constantly rising cost of college tuition, while spending $6 billion of taxpayersâ€™ money. It only helps students while they are paying back loans instead of possibly helping with the cost of college.
â€œEvery year it seems students have to borrow more money because the cost keeps rising,â€ Siudym said.
Western Senior Jamie Sanger is one of many students who will benefit very little if any from this bill.
â€œI would have liked to have seen a bill like this pass four or five years ago,â€ she said. â€œIt would have helped me quite a bit then, but I am glad to see that the government is making an effort to make college more affordable.â€
Democrats are still unsure exactly where the $6 billion will come from, but speculations are that other federal student loan programs could be removed completely to fund this bill.