A recently proposed U.S. Senate bill could ease the burden of Northwestern students with large student loans.
Sen. Dick Durbin (D-Ill.), the assistant minority leader of the Senate, proposed the bill, called the “Reverse the Raid on Student Aid Act.”
Student loan interest rates are scheduled to increase July 1 if the measure is not passed: Federally subsidized Stafford loans will be fixed at 6.8 percent from a variable 4.75 to 5.38 percent, and parent loans are set to increase from 6.1 percent to 8.5 percent.
Durbin proposed cutting these fixed interest rates in half, fixing the Stafford loan rate at 3.4 percent and the parent loan rate at 4.25 percent. The bill also allows students to consolidate their loans while still in school.
“Raising interest rates on loans and stopping students from consolidating loans at lower interest rates means they will be paying more back over a longer period of time,” Durbin said.
“Debt … will have an impact on the job they select and on their lives,” he said. “In a time when we need the very best and brightest graduating and making America stronger, this additional hardship is not making things easier.”
The bill is a response to a $12 billion cut in student aid under the 2007 budget requested by President Bush and passed by Congress, according to Durbin’s office. Democrats have labeled the budget the “Raid on Student Aid.”
Though Republican members of Congress contacted by The Daily were unavailable for comment, a letter distributed online by the House Committee on Education and the Workforce responded to Durbin’s accusations.
“Those mislabeling reform as a ‘Raid’ have completely – and purposely – ignored the other student benefits enacted under the Deficit Reduction Act,” wrote Rep. Buck McKeon (R-Calif.), chairman of the House Committee on Education and the Workforce, in a “Dear Colleague” letter. He cited new grant aid to low-income students pursuing math, science and foreign language degrees, the availability of PLUS loans to graduate students and increased student loan limits for freshmen and sophomores.
Both parties cited the problem of education access and student debt. Average undergraduate debt increased by more than 50 percent over the last 10 years, according to the U.S. Department of Education. Under the new bill, a student with an average $17,500 in student debt would save $5,600, according to a press release from Durbin’s office.
“I never would have made it through college without student loans, and a lot of people would say the same thing,” Durbin said. “Fortunately for me, my career choices were not influenced by loans, but that’s not the case today.”
Karen Foley, president of Scholarship Chicago – an organization that provides scholarships to underprivileged, college-bound high school graduates – said she experienced undergraduate debt and has witnessed its effects through her work. Durbin’s bill would be a step in the right direction, she said.
“Expenses overall are going up and parents’ and guardians’ incomes are not going up, so (students) are caught in a squeeze,” Foley said.
“The need goes right across the spectrum. The ability for students to be able to finance their debt is a smart economic decision.”
The bill also proposes to increase the maximum Pell Grant award to $6,000 from $4,050 by 2011, allowing students to consolidate their loans both while still in school and after, with a different lender than the one they had while in school.
Rep. George Miller (D-Calif.) proposed a bill with similar provisions in the House of Representatives. Both bills are currently in committees.
Reach Libby Nelson at [email protected].
