The College Student Relief Act, bill H.R. 5, which will make college more affordable by cutting the interest rates on certain subsidized student loans in half over the next five years was passed by the Democratic-controlled House on Jan. 14. House Education and Labor Committee Chairman George Miller, D-CA introduced the bill on Jan. 12 and was passed by a vote of 356-71. The 6.8 percent interest rate will drop .68 percent in stages until it is finally 3.4 percent in five years. The final 3.4 percent interest rate will only apply to subsidized Stafford loans first disbursed on or after July 1, 2011 and before Jan. 1, 2012. Loans with first payments after that six-month window will carry the 6.8 percent rate.
Even students borrowing while the policy is being phased in over the next five years will save a significant amount of money, according to an analysis completed by the U.S. Public Interest Research Group.
The interest rate cuts will result in the typical borrower in Louisiana, who acquires $13,077 in need-based loan debt, saving between $2,160 and $4,180 in interest payments over the life of a loan. This depends on when the student applies for the loan, according to a U.S. PIRG analysis. This bill targets low-and middle-income students and their families, according to a press release. Estimates prove that the bill will be beneficial to over 68,000 students in Louisiana.
“The cost of tuition at most public universities has skyrocketed in recent years, putting college out of reach for more and more students,” U.S. Rep. Charlie Melancon, D-LA said in a press release. “I am proud to vote for this bill.”
Melancon added that the economy depends on a highly skilled and well-educated work force to remain strong.
“Making college more affordable will benefit all Louisianans in the long run by helping our state compete in global economy,” he said.
The bill will cost taxpayers $6 billion and the future of this bill is uncertain beyond the House’s decision, according to the Associated Press.
According to a press release, tuition and fees at public universities have increased by 41 percent after inflation since 2001 and have also increased by 17 percent at private institutions. Student loan interest rates have also risen by almost two percent in addition to tuition and fees.
Approximately 5.5 million students use subsidized Stafford loans each year, and 3.3 million of them attend four-year private, nonprofit or public institutions, according to an analysis completed by the U.S. PIRG.
A Newsweek election poll revealed that 88 percent of Americans support cutting student loan interest rates.
Students presented personal stories and showed support for the bill at a Capitol Hill news conference Jan. 11, and students at Nicholls support the bill as well.
“I think it’s a good idea for future students who will be going to college for 4 or 5 years,” Jason Fischtziur, general studies senior from New Orleans, said. “It’ll be easier for the them to pay it back when it’s time.”
The current 6.8 interest rate was not that big of a problem as long the interest rate did not exceed 8 percent, Fischtziur said.
“The current interest rate is not nearly as bad as interest rates for other loans,” Fischtziur said. “But, keeping the interest rate low will benefit everyone in the long run.”
In a press release, the Congressional Advisory Committee on Student Financial Assistance said financial barriers will prevent an estimated 4.4 million high school graduates from attending a public four-year institute over the next decade and prevent another two million high school graduates from attending any college at all.
