he long sigh of relief college students exhaled last week after the federal government’s announcement of a bill to ease college costs has been cut short. Just when we thought we were finally getting a break, reading the fine print trumped the excitement many of us felt when the House overwhelmingly voted to pass the College Student Relief Act of 2007, which aims to cut interest rates on student loans in half for an estimated 5.5 million students.
Upon closer observation, the legislation, which is known as H.R. 5, leaves many of us struggling under the weight of student loans. “Many” meaning more than half of us.
Promising to increase the opportunity for students from low- and middle-income families to attend college, the new Democratic majority introduced the bill as part of its “Six for ’06” agenda. The bill comes at a critical time for college students, especially those from low- and middle-income families, when tuition and fees for public colleges and universities are at an all-time high.
With a triumphant slam from her gavel at the announcement of the vote, House Speaker Nancy Pelosi, D-Calif., remarked, “At a time when college tuition continues to skyrocket, this crucial legislation will help remove some of the barriers to a higher education.”
That sounds great, but keep in mind that the key word here is “some.” H.R. 5 is only written to cut interest rates on federally subsidized Stafford loans, which make up only about half of all college loans and are reserved for the lowest income students.
So what does the passage of this bill really mean?
It means that for right now, not a lot is going to change for those of us who are already in college, and the bill will certainly not help all student borrowers. Students with unsubsidized loans will continue to pay the current 6.8 percent interest rate. Most students take loans from a number of sources, including 20 percent who take out risky private loans, which often have even higher interest rates and less protection. Let’s just hope that the rest of the Democrats’ education plans are more inclusive.
Also, the bill does not focus on the financial struggles of students while they are enrolled in school. The nature of subsidized loans is such that interest doesn’t start accruing until after graduation. In the meantime, enrolled students will opt to work outside of school in an effort to lessen the reliance on loans, all while maintaining their schoolwork. This often requires that they take fewer classes per semester. As we all know, this is typically how one ends up attending a four-year college for six or seven years.
Another downside of H.R. 5 is that it will be implemented over several years, meaning that all the savings the Democrats are raving about will not be felt by most of us for some time. The five-step plan begins by cutting interest rates to 6.12 percent starting July 1 of this year and continues every year thereafter until 2011.
The Democrats proudly said that once the measure is fully phased in, an average student borrower with $13,000 in subsidized Stafford loans will save $4,400 over the full term of the loan. However, critics have pointed out that most students would save considerably less money than is promised because the lowest rate, 3.4 percent, does not incur until the final year of the five-year program.
We appreciate the direction the Democrats are trying to take, but we must concede that they need a more comprehensive approach in regards to higher education. While the bill is the first of a series of changes to make higher education an attainable option for more students, we question whether it is the best approach. Passing a bill that encourages loans at the prospect of someday paying less interest does not address the issue of tuition and fees that have outrageously risen 41 percent since 2001.
So, while this bill might help out our younger siblings, most of us are still going to graduate with a sizeable debt to pay off. Tuition simply needs to come down, and a series of small changes over multiple years with the overall aim to make college accessible to everyone is going to feel insufficient for a long time. On our predominantly progressive campus, we are used to long-term solutions, but paying for school is more of an immediate issue. If this small step of lowering interest takes five years to enact, how long will it really be before every qualified student can afford college?