AUDREY REED
Editor in Chief
ArThe U.S. House of Representatives passed a measure yesterday that will cut $12.7 billion dollars from funding for student loans in a 216 to 214 vote. The largest student loan cut in history will cause interest rates on student loans to increase.
The cuts, which are part of President Bush’s $40 billion budget-reduction package, will be made over five years. As a result, interest on Stafford Loans will increase from 4.7 percent to 6.8 percent and Parent Loans for Undergraduate Students (PLUS loans) will rise from 6.1 percent to 8.5 percent.
“For those students that borrow, it will impact them,” wrote Director of Financial Assistance Janet Lockhart in an e-mail. “First-year students, of course, will see a greater impact.”
Lockhart added that student loans are still a viable and good option to pay for college costs.
The new interest rates will be set in place July 1. By consolidating loans before June 30, students can lock in the current rate.
The bill was originally voted on and passed by six votes by the House in December, but because changes were made to it, the House had to vote again.
Luke Swarthout of the State PRIG’s Higher Education Project said the vote was closer and that the bill took longer to pass than anyone expected. This was due to student and interest-group voices.
“Students drew a line in the sand,” Swarthout said. “This is an opportunity to build.”
Bush said these cuts were made because of inefficiencies and unnecessary subsidies in the student loan program.
Opponents of the plan say it is unfair to students and their families.
“At a time when college costs continue to rise and students are going deeper into a financial hole, Congress has mistakenly decided to use students and families to pay for other priorities,” Swarthout said.
Pepperdine students who graduate with debt leave with more than the national average.
April 2005 graduates who were on financial assistance left Pepperdine with an average of $29,500 dollars in debt. The national average is $17,500 and the highest average in four-year universities is University of Miami where 58 percent of the students graduate with $31,723 dollars in debt on average.
Swarthout said he encourages students to talk to their congressman about rising education costs.
“Congress needs to face facts and look at what is going to happen to students,” he said. “Students need to make congress address the issue of student debt.”
02-02-2006
