In response to the $12 billion cut from federal student aid loans in February, a congressman and senator introduced legislation Thursday looking to cut the interest rates of student and parent loans in half, starting with the 2007 fiscal year.
U.S. Congressman George Miller (D-CA) and U.S. Sen. Dick Durbin (D-IL) wrote the Reverse the Raid on Student Aid Act in response to the cuts that many termed the “Raid on Student Aid.” This bill would reduce interest rates on subsidized loans from 6.8 percent to 3.4 percent and on parent loans from 8.5 to 4.25 percent beginning July 2006.
With the average total student loan debt at $17,500 for undergraduates, each student would save $5,600 with this new legislation.
Miller previously tried to amend H.R. 609, the Higher Education Act of 1965, which looked at reducing loan rates, establishing institutions for low-income minority students and providing year-round Pell Grants. The amendment failed by 20 votes, which caused Miller to write the new legislation with only the loan rate decreases as the focus.
Miller and Durbin said the current reduction of student aid is making college less affordable for students who are already struggling to pay for higher education.
“Unless we act now, starting July 1 the price of a college education will increase dramatically for students across the country,” Durbin said. “New interest rates on student loans could make the ticket price of higher education unaffordable, and cost the opportunity to get a college education.”
“It is wrong to cut financial aid for students and families already struggling to pay for college,” said David Wu, Oregon U.S. Representative Democrat from the first district, in a written statement.