Vote on student loan rate hike imminent

The U.S. House of Representatives is preparing to vote this week on a budget bill that would increase the average cost of student loans by thousands of dollars and make $14.3 billion in cuts to federal financial aid programs over the next five years.

The bill, called a budget reconciliation bill, proposes cuts to several federal programs in addition to financial assistance to college students. If passed, the bill would be the largest cut in federal student aid programs to date.

The bill would reverse a previous law capping the interest rates for student loans at 6.8 percent, increasing the cap to 8.25 percent. It would also increase the cap on parent loans from 7.9 percent to 9 percent. For a graduating college student with the average debt load of $17,500, the proposed changes would increase the cost of paying off loans by $5,800 in interest.

The budget bill would also raise taxes on student loans, raise interest rates on consolidation loans and reduce subsidies paid to student lenders, totaling $20.5 billion in cuts over a 10-year period, according to estimates by the Congressional Budget Office.

Oregon Congressman David Wu, a major opponent of the bill, spoke at the Northwest Student Leadership Conference, a gathering of over 500 student leaders from throughout the Northwest region at Portland State Saturday, urging conference attendees to organize on their campuses against the bill.

“This is a down payment you can make on a life of engagement,” Wu said.

Support of the budget bill is divided starkly down party lines, and Wu implied in his remarks at the conference that students should focus their efforts on what he described as “about a dozen” Republican representatives whose support of the bill may be wavering.

“There is not a single Democratic vote for this set of cuts,” Wu said. “That gives you an idea of who you should be calling and writing.”

Students attending the leadership conference wrote over 400 letters over the weekend to members of Congress urging them to vote against the budget bill. Portland State students have also been involved in fighting the bill, organizing two “call in days” to call members of Congress and urge them to vote against the bill.

In an interview Monday, Portland State student body President Erin Devaney lamented the decreasing affordability of higher education. Oregon students have already faced sharp tuition increases in recent years, and increased loan costs may be too much of a burden for some students to bear, Devaney said.

 “It sucks that we’re at the point where we have to lobby for student loans,” Devaney said.

National college student advocacy groups, such as the United States Student Association (USSA) and the United States Public Interest Research Group (USPIRG) have also launched campaigns urging students to organize against what the groups have labeled the “raid on student aid.” Students have made over 10,000 phone calls and sent over 15,000 e-mails to members of Congress expressing opposition to the bill, according to the USSA web site.

Wu, who represents Oregon’s first congressional district, is a member of the House Education and Workforce Committee, which approved the cuts to student aid on Oct. 26. Wu, along with the other Democratic members of the committee, have spoken in opposition to the cuts, but the Republican majority on the committee was able to approve the plan.

“We fought it, but didn’t have the votes to beat it,” Wu said in an interview Saturday.

“I believe [the bill] deserves more attention,” Wu said. “The student aid issue is crucial to individual opportunity as well as collective prosperity.”

A letter signed by 203 House members opposing the cuts to higher education was sent on Nov. 2 to Speaker of the House Dennis Hastert, Democratic leader Nancy Pelosi and the chairmen and ranking members of the Education and Workforce and Budget Committees.

The letter expresses concern that the cuts may create barriers that prevent first generation, minority and low-income students from completing college.

“These changes are not simply an additional burden for the Congress to place on students – but the cuts may cause some students to forgo their college degree,” the letter states. “American students need and deserve more affordable college opportunities, not additional barriers to achievement.”

The budget reconciliation bill was originally planned to go to the House floor for a vote Nov. 10, but House Republican leaders postponed the vote fearing that the bill would not have enough votes to pass.

A rule attached to the budget bill allows House Budget Committee Chairman Jim Nussle to change the language of the bill anytime before it goes to the House floor without having to send it back to the Rules Committee. Because of the rule, House Republican leaders can alter provisions in the bill to try to garner more support.

In an effort to appease centrist Republicans, provisions allowing drilling in the Alaskan National Wildlife Refuge were dropped from the bill Nov. 9. The plan backfired, however, as supporters of the drilling provisions began expressing opposition to the bill, contributing to the delay on bringing the bill to a vote.