House OKs bill to cut rates in half over next five years

The House approved a bill yesterday in a 356-71 vote to cut interest rates on some student loans in half, hoping to eliminate debt for college students.

The bill will affect about 5.5 million students.

David Creamer, senior vice president for administration, said lowering the interest rates for these loans would be a “big positive.” He said it’s good to see legislators taking action.

“I can’t imagine any students or any families helped by loans will be hurt by this,” he said. “But as far as impact, I can’t imagine anything negative coming out of it.”

The bill focuses on the current interest rate for need-based student loans, which is 6.8 percent. If the bill is passed by the Senate and signed by President George W. Bush, the rates would drop to 3.4 percent in stages over the next five years.

Mark Evans, director of financial aid at Kent State, said lowering the interest rate is a good idea.

“Students are bearing the significant cost of education in student loans,” he said.

Evans said the cost of borrowing money has significantly increased over the last few years to help balance the federal deficit. The current fixed interest rate, formerly a variable interest rate, was introduced in July 2006.

However, the Bush administration said in a statement Tuesday it opposed the proposal, but it made no threat of a veto.

“Student debt loads have soared in recent years, and it is not clear that encouraging more loans is a wise course,” the administration said in a statement by the White House Office of Management and Budget. “Instead, the administration would support efforts to direct savings to additional grant support for low-income students.”

Evans said many critics of the proposal argue that lowering interest rates does not increase access to higher education. However, he said everything should be done to help access to higher education as well as lowering debt load.

Samantha Duggan, sophomore visual communication design major, said she’d rather see lower interest rates than direct-aid programs, which Republican lawmakers support.

“I think it’s better if they lower interest rates because it’s helping kids get set up for the rest of their life,” she said. “I’m going to be here for five years, so when my scholarships run out, I don’t know what I’m going to do.”

Contact administration reporter Tim Magaw at [email protected].