A congressional proposal to cut student interest rates on
Stafford Student Loans would save lower and middle-class students
thousands of dollars, according to a new report released by the
California Public Interest Research Group.
On the agenda as part of the first 100 hours of Congress, the
proposal would cut Stafford interest rates in half over the next
five years, from 6.8 percent to 3.4 percent.
Opposition to this bill is based on the concern that reforming
the student loan system could limit the availability of finances
from lenders, which may mean there would be less money available
for students, according to the American Osteopathic Association
Department of Government Relations.
Currently, every year, 5.5 million students borrow subsidized
Stafford Loans, which are federal student loans. With a subsidized
loan, the government pays the interest charges on the loan while
the student is in school. The government determines whether to
subsidize a loan by looking at a students’ Free Application
for Federal Student Aid, or FAFSA, report.
CALPIRG found that student debt and high tuition costs cause
fewer people to attend college. In addition, students receive a
degraded educational experience because they are forced to work
long hours, and students have fewer career options when they
graduate because their debt plays a factor in what career they
choose, according to CALPIRG’s Student Debt Alert pamphlet.
In 2004-2005, the average borrower graduated with $15,125 in loan
debt, according to the report.
CALPIRG gathered information from public and private
institutions and then used a series of mathematical equations to
calculate the average savings of a student borrower.
Gregory Cendana, internal vice president of the Undergraduate
Students Association Council, said he already has $12,000 dollars
in debt, despite working two summers.
“This proposal is important because with the rising costs
of tuition, students are either turned away from higher education,
or at the end of their undergraduate education, being in debt may
make them chose a job that pays more that they didn’t really
want to take,” he said.
In 2004-2005, 9,713 UCLA students took out subsidized Stafford
Loans, according to the report.
The CALPIRG report found that, on average, UCLA students
starting school in 2007 would save $2,500 in their lifetime with
the interest cut. In 2011, the average UCLA student will save
$4,840.
With costs for college rising in all areas, some students find
themselves searching for methods to pay off debt.
Jeanette Barsh, a CALPIRG campus organizer at UCLA, attended the
University of Texas and owes $25,000.
“Each payment is almost half in interest. I will be paying
it off for 20 to 25 years,” she said. “Most students
are in debt, which causes them to choose a job based on how much it
pays, rather than what they want,” Barsh said.
Nancy Greenstein, a member of the Santa Monica College Board of
Trustees, said many students make too much income to qualify,
though they are still in need of finances.
Three-quarters of college-subsidized borrowers come from
families with an annual income of $67,000 or less, just $2,000
above the median income.
Adel Morad, academic director at Santa Monica College, said many
students at Santa Monica College continue on to four-year
universities. However, they are sometimes discouraged by high
costs.
“The key is to make continued education accessible to all
of us,” she said.
Barsh said she hopes students will take action by writing to
their representatives once they become aware of the bill.
“When we stand up and show politicians that we care about
this issue, they will start paying attention to us,” she
said. The House of Representative is expected to vote on this issue
next week.