U.S. House to Address Lower Rate on Student Loan
By John P. McDermott, The Post and Courier, Charleston, S.C.
Jan. 14–College of Charleston senior Jacqui Barry considers herself fortunate.
The 21-year-old art history major is set to graduate this spring with no student loans hanging over her.
But that’s certain to change if she follows through on plans to continue her education by attending either law school or graduate school. And she worries the debt she’ll have to take on could interfere with future decisions, such as buying a home or starting a family.
“It makes me very nervous,” said the Boston native.
As president of the student body, Barry said it’s her role to represent the interests of her fellow undergraduates. That’s why she urged Congress on Thursday to halve the 6.8 percent interest rate that private lenders charge on government-backed Stafford loans, which typically go to help needier students.
“It really hits home,” she said. “I know many students here who are in extreme debt.”
Barry’s comments echoed those of the nonprofit U.S. Public Interest Research Group, which Thursday released a report at the College of Charleston showing that Stafford borrowers starting college in 2007 would save an average of $2,280 if the rate reduction measure is passed and fully implemented.
South Carolina would rank among the top 10 states that would show the highest average student savings.
The U.S. House of Representatives is expected to vote on the proposal this week.
Created primarily for needy students, Stafford loans are subsidized by the U.S. government, which foots the interest payments while the borrowers are enrolled in college. Between 2005-06, more than 6 million undergraduates borrowed nearly $37 billion.
It was just six months ago that the Congress fixed the once-variable rates on Stafford loans at 6.8 percent. Campaigning Democrats promised to cut them by half.
The ensuing bill, known as the College Student Relief Act of 2007, is proving to be a tough sell in the corridors of power, according to the Chronicle of Higher Education. The publication noted recently that while the Stafford plan was a big hit during the election season, it is “generating little enthusiasm among the student-aid experts and college lobbyists whom the lawmakers are trying to get to rally behind it.”
SLM Corp., or Sallie Mae, the largest provider of education loans, said its main concern lies with any further government cuts to the student loan system.
“We do not oppose reducing student loan interest rates,” the company said in a statement.
The Consumer Bankers Association said it is opposed to lowering Stafford loan rates.
Joe Belew, president of the industry trade group, said in a statement this week that his members “share concerns about the rising expense of college education,” but it does not support the House bill.
Belew described the proposed rate reductions as “budget cuts” that would affect lenders and borrowers alike. He said they would lower profits and lead to new fees. He also said they would limit a lender’s ability to invest in technology, improve customer service and offer benefits to borrowers.
Matt Ohloff of Public Interest Research Group’s Atlanta field office said college affordability could affect the national economy if debt deters bright but needy students from higher education.
“As America moves to more of a knowledge based economy, a college degree is more essential than ever, even for entry-level jobs,” Ohloff said.
—–
To see more of The Post and Courier, or to subscribe to the newspaper, go to http://www.charleston.net.
Copyright (c) 2007, The Post and Courier, Charleston, S.C.
Distributed by McClatchy-Tribune Business News.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
SLM,