After pledging early action on higher education in 2007, the House of Representatives on Wednesday approved a plan to cut student loan interest rates by half over a five-year period despite strong White House opposition.
By a 356-to-71 vote, lawmakers approved cutting interest rates on federally subsidized loans to 3.4 percent over five years. Some lawmakers originally favored an immediate cut to the 3.4 percent target but opted for a gradual change due to costs. If implemented immediately, the rate change would have cost $30 billion, instead of $6 billion as projected with the five-year option.
“Today is a great day for anyone who believes in the American dream,” said Rep. Linda Sanchez, D-Calif., at a news conference before the vote. Sanchez said she has a unique perspective on the issue in Congress because she is still repaying her own student loans.
“This bill will help less advantaged and minority students pay for their education,” she added.
Before the vote, the Bush administration said it opposes the rate change, which now goes to the Senate. The White House said the change mainly would help those who have already graduated from college, not low-income students still deciding whether to go on to higher education.
“Reducing student loan interest rates would direct Federal subsidies to college graduates, not to students and their families who are struggling to meet current and future educational expenses,” the Bush administration said in a statement.
While it did not threaten a veto, the White House said it prefers other alternatives such as increased need-based grant aid to students. “Student debt loads have soared in recent years, and it is not clear that encouraging more loans is a wise course,” it said.
But House Democrats said the loan vote is only the first in a series of moves this year on higher education.
“Passage of this legislation is only a first step to make college more affordable,” said Rep. Debbie Wasserman Schultz, D-Fla. Other steps include a renewed focus on the Pell Grant, where the maximum grant amount has held steady for the past four years despite rising tuition.
Rep. Tim Bishop, D-N.Y., also argued that lower interest rates promote college access. A former admissions counselor and college provost, Bishop said high school students know the financial pressures of college and are leery of high-interest loans.
“High monetary obligations scare people off,” he said. “It affects access.”
Other Democrats said the move may help scale back a $12 billion cut in student loan programs enacted by Congress a year ago.
“Last year we said we were going to take America in a new direction,” said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee. “Today, by voting to cut student loan interest rates in half, we are showing we meant it.”
Sponsors say the College Student Relief Act will save the average student $2,280 for loans taken out in 2007. The typical student takes out about $17,500 in loans.
The Senate has not yet scheduled a vote on the measure. Some lawmakers have indicated they want to consider the rate change as part of a larger package of higher education improvements.
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