White House abandons proposal to raise student loan costs

In the face of strong Democratic opposition, the Bush administration backed off on a proposal that would have raised student loan costs. The proposal, which was attached to a bill requesting $27 billion in anti-terrorism and defense funds, would have saved the government an estimated $1.3 billion by uncapping interest rates on consolidated student loans.

Immediately after the announcement of the bill on April 27, Democrats accused the administration of attempting to shortchange millions of students and made it clear that the bill would fail in Congress.

The administration, sensing a political blunder, rescinded the proposal five days later, but argued that it would have made up for the $1.3 billion shortfall of the Pell Grant program.

The bill would have eliminated the system that allows students to merge several variable-rate loans into one low fixed-rate loan that is guaranteed by the government.

Oregon students avoided already inflated tuition costs in a state that ranks a D- nationwide in affordability according to the nonprofit National Center for Public Policy and Higher Education. The same report found that Oregon families spend roughly 30 percent of their income on resident tuition at state public universities.

Sen. Ron Wyden, D-Ore., was one of many Democratic congressional members who signed a letter expressing deep concern over the proposal.

The letter stated, “We believe strongly that our government should make it easier for low and middle income students to attend college, not harder and more costly.”

Ari Fleischer, White House spokesperson, commented in the New York Times, “Education is a top priority for this president, and he will remain committed to it. But there is a shortfall in the funding formula as a result of congressional action.”

Increased tuition costs are hurting the accessibility of colleges nationwide according to a report released by the Democrats.

Portland State faces an expected 8 percent tuition hike and 5 percent cut in the departments.

A report released by a California “think tank” showed that the family income of the richest 20 percent has kept up with increasing tuition costs, while the financing of college continues to take a larger chunk out of middle and lower class family incomes.

The Bush administration said they will begin looking for other means to cover the shortfall in the Pell Grant program, which assists 4.5 million low-income students.

Democrats laid blame on the president’s $1.35 trillion tax cut for the under funding of programs.

Rep. Earl Blumenauer is opposed to raising the costs of student loans, according to his press secretary Freya Thoreson.

The consolidated loans, which currently have an 8.25 percent interest cap, give students up to 30 years to repay their loans.

Students would have seen their education costs rise by thousands of dollars according Sen. Tom Harkin, D-Iowa. Consumer groups estimated that the change would have cost a borrower of $17,000 more than $6,000 in a 20-year period.

Amid all the criticism, the Education Secretary Rod Paige said that Bush remains committed to funding Pell grants, tax credits and new tax deductions for interest paid on college loans.

Sen. Gordon Smith was not available for comment.