The House of Representatives has passed a bill that proposes to reduce interest rates on need-based student loans more than three percent over five years.
“We’ve been pushing for a bill like this since last year, when Congressman Hinchey (D-NY) came and spoke on Ho Plaza,” said Adam Gay ’08, president of the Cornell Democrats, referring to Hinchey’s appearance last April at a rally against cuts to student aid.
“Ever since Republicans cut funding for financial aid we’ve concentrated on this issue.”
H.R. 5, the College Student Relief Act, was passed two weeks ago as part of the new Democratic majority’s agenda for their first 100 hours in power.
“Hinchey is very pleased with the efforts in trying to cut the interest rate on student loans,” said Jeffery Lieberson, a spokesman for Hinchey.
“Unfortunately, when Republicans were in the House, there wasn’t much progress in terms of helping students afford higher education.”
According to CNN, the 109th Congress made $12 billion in cuts to student loan programs.
This time, the bill passed by a wide margin: 356-71.
“A large contingent of Republicans signed the bill,” Gay said. “It’s nice to see them join with the Democrats in funding higher education.”
Gay said he thinks that younger students will “recognize which party has their best interests in mind” and questioned whether any students would be opposed to the bill.
Megan Sweeney ’07, president of the Cornell College Republicans and a Sun columnist, sees the bill as a mixed blessing and thinks that the money college students may save will eventually have to come out of someone else’s pockets.
“The College Student Relief Act is a great sound bite that appeals to college kids, but the money has to come from somewhere,” Sweeney said.
“As a Republican, I’m concerned about gross overspending by the federal government,” she said. “I think an answer to the needs of students can be provided by the states. That pushes the issue back to Spitzer.”
New York State Governor Eliot Spitzer’s press representative, Brad Maione, declined to comment on the College Student Relief Act, saying he had not yet reviewed it.
“We can’t discuss any plans specific to higher education in New York State in detail until the new budget is unveiled Tuesday or Wednesday this week,” Maione said.
“There will be initiatives announced by the governor as part of his executive budget announcement,” he said.“We recommend a comprehensive education policy that will help students achieve academic excellence, ensure access to education for students and will contribute to the state-wide work force, ensuring economic development efforts.”
“H.R. 5 does nothing for current students,” said Thomas Keane, director of financial aid for scholarships and policy analysis. “It phases in cuts on interest rates students are charged when going into repayment on their loans. Maybe, with this bill, once students have graduated, they’ll be a little less concerned about going after high-salary jobs to help pay off their debt.”
Keane said that while H.R. 5 will help keep long-term costs down for students, it doesn’t help institutions cap the cost of tuition. The costs of attending Cornell reflect, in part, three factors: the salaries for faculty and staff, funding for student programs and funding for research.
According to Keane, 6,600 students — including undergraduate, graduate and professional students — were on need-based subsidized direct loans in the 2005-2006 school year.
1,900 undergraduates received the Pell Grant, a federal grant for students whose families have incomes of less than $40,000 per year.
Overall, about 48 to 49 percent of undergraduate students are on need-based financial aid, according to Keane.
“There’s another 15-20% of students who finance their education through non-need based means, which includes Key Bank alternative loans, tuition benefits from parents’ employers, or merit-based scholarships,” he said.
Keane added that there’s overlap between the students who have need-based aid and non-need-based aid — some students receive both.
“I think one great way to help kids attend private universities is an expansion of the Pell Grant program,” Keane said. “I also think the maximum loan amount for student borrowers should be increased on subsidized and unsubsidized loans.”
The federal maximum for Stafford loans is $3,500 for a second-year student.
“$3,500 doesn’t go very far when you consider Cornell’s cost of attendance, which is more than $45,000 per year,” Keane said.
Lieberson did not deny the possibility of legislation increasing the maximum Pell Grant scholarship.
“At this point, there’s not more information on such legislation, but Democratic leadership does want to increase the amount of funding for students,” he said.