In one of the last votes of 2005, Congress showed approval for a
bill which would cut funding for government-sponsored student loan
programs by $12.7 billion.
Dubbed the “reconciliation bill,” the measure would
include a $12.7 billion cut from student loans to combat the
federal deficit and fund tax cuts.
The House approved the bill before the holiday break in
December, and the Senate approved the bill by a narrow margin of 51
to 50, with Vice President Dick Cheney breaking the tie. Because
the Senate made small changes before passing the bill, it will
return to the House for a final vote after the winter recess, which
could come as late as February. If passed by the House, President
Bush is expected to sign the bill.
Because the bill is likely to pass, the Undergraduate Students
Association Council is focusing on preventing student fee
increases, in order to reduce the reliance on student loans.
The student loan cuts are part of a $40 billion package to
reduce the federal deficit and are the largest cuts in the history
of the student federal loan programs.
The reconciliation bill would raise interest rates on student
and parent loans and cut government subsidies to private
lenders.
In the University of California, 67,000 of over 200,000 students
take out federal loans and will be affected by these hikes in
interest rates, said USAC Internal Vice President Jeannie
Biniek.
She said the legislation would increase interest rates from 4.7
percent to 6.8 percent and result in an average debt increase of
$5,800 per student receiving loans.
The legislation will have the biggest impact on low-income
working students, said Ruth Obel-Jorgensen, organizing director of
the UC Students Association. These cuts may affect how many hours
students have to work each week, Obel-Jorgensen said.
She said small amounts of money do not make much of a difference
to most lawmakers, but in the life of a working student, the fees
add up. To students, “$100 is a big deal,” especially
when one textbook can cost over $100, she said.
The cuts may affect students’ decisions to prolong their
academic careers, said Student Regent Adam Rosenthal. He said
because of the increased interest rates, it will take students
longer to pay off their debt, which may deter students from going
to graduate school or completing a double major.
The cuts may also affect the economic diversity of the UCLA
campus, Rosenthal said. He said the growing price of a university
education will deter low-income and underprivileged students and
parents from trying to finance an education.
For low-income families, the “sticker shock” of the
price of a university education may have an effect on where
students attend school, and even how many children in the family
can afford to go to college, Rosenthal said.
“Working students who rely on loans to access higher
education will not feel comfortable taking on that much
debt,” Biniek said.
Rosenthal said the regents are very concerned about financial
aid for students and the federal role in offering loans for
students.
“Decision-makers are not prioritizing higher education and
the affordability of a university education” Biniek said.