Bill that would slash student loans stalls

By Mary E. Witlacil
witlacil@mscd.edu

A bill that would cut approx $8.7 billion in federal funds to the student loan program has stalled in the U.S. House of Representatives after it failed to gain enough votes.

House Resolution 609, a provision of the Budget Reconciliation Bill, is scheduled for a vote on the House floor before the end of the year, but has been stalled because the larger bill failed to gain enough votes. Sponsors and proponents of the Budget Reconciliation Bill have delayed voting for another week.

Many student aid associations oppose the bill, as it is likely to increase a student's unmet financial need, which would discourage many students from pursuing higher education.

"We must be careful when cutting wasteful (student loan) programs that we are not hurting those who are in need," said Bruce Benson, Metro Board of Trustees chair.

HR 609 would renew the variable interest rate on student loans, which is set to expire July 1. If not renewed, the variable student loan interest rate would be raised from 4.7 percent to 6.8 percent, and would remain static.

"The variable interest rate allows for (borrowers) to take advantage of market fluctuations, capping the interest rates at 8.25 percent and offering student borrowers access to lower interest rates when the market produces them," said Alexa Marrero, a spokesperson for the U.S. House Education and Workforce Committee.

"(H.R. 609) would make the student loans program more efficient, offering students more bang for their buck."

Christopher Arend, spokesman for Rep. Diana DeGette, D-Colo., said the Congresswoman finds the bill "deeply troublesome."

"She is concerned that HR 609 increases the cost of attending college by raising student loan interest rates and eliminating important benefits students rely on today," Arend said in an e-mail.

Luke Swarthout, a spokesperson for the Colorado Public Interest Research Group for the Federal Higher Education project, a group that advocates on behalf of college students to make higher education more affordable, said H.R. 609 would unnecessarily put financial burden on the backs of students.

"The typical student (accrues) $17,500 in debt and (H.R. 609) could cost students an additional $5,800 in interest payments over the life of the loan, making repayment more onerous for millions of college students," Swarthout said. "H.R. 609 would (raise) interest rates for larger loans over a longer period of time."

UCD's CoPIRG chapter has been working to raise awareness of the threat to the nation's student loan program.

A similar bill that would reduce spending by $35 billion has already passed in the senate with a 52-47 vote.