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Student Loan Interest Rate on House Agenda Today

Jan. 17, 2007

The House of Representatives today is poised to cut interest rates on federally subsidized Stafford student loans as members take up the College Student Relief Act of 2007 (H.R. 5). 

Action on the legislation is part of the Democratic majority’s "100 hours" agenda.

Sponsored by Rep. George Miller (D-CA), chair of the House Committee on Education and Labor, and 209 cosponsors, the legislation calls for reducing interest rates on Stafford loans from 6.8 percent to 3.4 percent over five years at a cost of $6 billion to the federal government. By lowering monthly payments for college graduates, the average borrower would save money over the life of their loan.

The American Council on Education (ACE) and 23 other higher education organizations endorsed H.R. 5 in a Jan. 12, 2007 letter to the House of Representatives and in a similar letter to Chairman Miller on Jan. 13.

"If enacted into law, H.R. 5 would cut in half the rate on subsidized Stafford Loans for undergraduates over the next five years from the current rate of 6.8 percent to 3.4 percent," wrote ACE President David Ward. "Once this rate cut is fully phased in, an average need-based borrower with $13,800 in student debt will save thousands of dollars over the life of their loan. The College Student Relief Act will help an estimated 5.5 million low- and middle income students and their families pursue their goal of a higher education."

Rep. Howard "Buck" McKeon (R-CA) is leading the opposition to the bill in the House. He introduced on Jan. 16 the College Affordability and Transparency Act, which calls for redesigning the Education Department’s college information web site, revising the Integrated Postsecondary Education Data System, developing of a college affordability index, and a Government Accountability Office study of college costs.

The Bush administration also opposes H.R. 5. In a statement released Jan. 16 by the Office of Management and Budget, the administration stated that "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 White House "would support efforts to direct savings to additional grant support for low-income students."

H.R. 5 is expected to pass the House easily today. Additional information on the H.R. 5 debate is available from the following media organizations:

House Debates Cutting Student Loan Rates
The Associated Press (The Chicago Tribune, free reg. req.) (January 17, 2007)

OPINION: Educating Democrats|
The Wall Street Journal (sub. req.) (January 17, 2007)

Political Maneuvering on Student Loans
Inside Higher Ed (January 17, 2007)

White House Opposes Bill to Cut Student-Loan Interest Rate
The Chronicle of Higher Education (sub. req.) (January 17, 2007)

College Loan Proposal Faulted
The McClatchy News Service (The Miami Herald, free reg. req.) (January 17, 2007)