2008 Woodie Awards
First 100 Hours of New Congress Bring Lower
Charles Dervarics/ InsideHigherEd.com
Issue date: 1/11/07 Section: News
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While many education advocates hope Democrats will push for more funding this year, early signs are emerging that the 110th Congress may have trouble fulfilling this goal.
House Democrats are already opting for a 'go-slow' approach on one of their top campaign promises of fall 2006 - to slash student loan interest rates in half, to 3.4 percent. Under legislation proposed for the new Congress' first 100 hours of business, the House of Representatives would make such a cut, but only over a five-year period. As a result, the promise wouldn't be fulfilled until 2011.
"It's all about cost," one education advocate told Diverse. Cutting the interest rate by half would cost $30 billion over five years if approved immediately - a task made more difficult with the government already operating under a deficit.
But the issue became even more complex after Democrats voted to tighten budget rules on new spending and tax cuts. Under the new policy, called "pay-as-you-go," all new initiatives must be fully funded either through higher taxes or budget cuts.
That has major implications for the interest-rate plan and its $30 billion price tag. But implementing the change over five years would cost only about $6 billion.
Under the House legislation, interest rates for subsidized student loans for undergraduates would drop from 6.8 percent to these levels:
• 6.1 percent in 2007;
• 5.4 percent in 2008;
• 4.8 percent in 2009;
• 4.1 percent in 2010; and
• 3.4 percent in 2011.
Advocates for students said the change still would have a significant impact.
"Lowering interest rates on loans is a great first step towards a more affordable college education," says Luke Swarthout, a higher education advocate for U.S. PIRG, a public issue advocacy group.
Even with a phased-in approach, the typical four-year college student starting school in 2007 with subsidized Stafford Loans would save about $2,280 over the life of the loans.
House Democrats are already opting for a 'go-slow' approach on one of their top campaign promises of fall 2006 - to slash student loan interest rates in half, to 3.4 percent. Under legislation proposed for the new Congress' first 100 hours of business, the House of Representatives would make such a cut, but only over a five-year period. As a result, the promise wouldn't be fulfilled until 2011.
"It's all about cost," one education advocate told Diverse. Cutting the interest rate by half would cost $30 billion over five years if approved immediately - a task made more difficult with the government already operating under a deficit.
But the issue became even more complex after Democrats voted to tighten budget rules on new spending and tax cuts. Under the new policy, called "pay-as-you-go," all new initiatives must be fully funded either through higher taxes or budget cuts.
That has major implications for the interest-rate plan and its $30 billion price tag. But implementing the change over five years would cost only about $6 billion.
Under the House legislation, interest rates for subsidized student loans for undergraduates would drop from 6.8 percent to these levels:
• 6.1 percent in 2007;
• 5.4 percent in 2008;
• 4.8 percent in 2009;
• 4.1 percent in 2010; and
• 3.4 percent in 2011.
Advocates for students said the change still would have a significant impact.
"Lowering interest rates on loans is a great first step towards a more affordable college education," says Luke Swarthout, a higher education advocate for U.S. PIRG, a public issue advocacy group.
Even with a phased-in approach, the typical four-year college student starting school in 2007 with subsidized Stafford Loans would save about $2,280 over the life of the loans.
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