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At Pepperdine, 70 to 75 percent of all students receive some sort of financial aid. Loans are certainly an issue when attending an expensive private institution like Pepperdine, and many students say financial stress takes its toll.
“The thought of loans is always kind of there in the back of your mind,” said freshman Rachel Shipp. “It’s kind of scary to think, I can’t even pay off some of my bills this year without help from my parents; how am I going to pay off loans?”
Last week, the House of Representatives passed a bill that would cut Stafford Loan interest rates in half over a five-year period and marking part of the first one-hundred hours in the Democrat-lead House’s first session. “This bill is good for students. It’s good for the budget, and it’s deserving of our support,” Rep. John Spratt (D—S.C.) told the Associated Press. Another proposal that has not yet been implemented is an increase in Pell Grant funds. The highest grant available now is $4,050, but the Democrats want to raise the number to $5,100. Pell Grants do not have to be paid back and are only awarded to students with the most financial need.
In its current state, the bill lowers interest rates from 6.8 percent to 3.4 percent but only on need-based federal loans. The bill’s supporters intend to implement the process in a span of five years spreading out the cost.
Also, the House intends to reduce the government’s guaranteed return to lenders who make student loans. If this is done, banks will have to take on more fees, because the amount of money the government pays for these specific loans will be cut back. While students are still in college, the government pays the interest that builds up. Students only have to start paying off interest after they graduate.
The Bush administration, however, is against the bill, and many Senate Republicans are attempting to create a “more comprehensive measure” that could make it much more difficult to pass the final bill in to law. “To make college accessible, we should focus on what we can do now for students, not when they graduate.” says Rep. Shelly Moore Capito (R—Va). The Republicans are more in support of grants instead of loans.
“If we make it so unattractive to be in the student loan business, they’ll go into the car business,” said California Representative Howard McKeon (R-Calif).
As the expenses stack up, students face higher and higher bills as they near graduation. “I have 12,000 (dollars) in grants, and then the rest of my total college cost is in loans right now,” said freshman Abby Uhrinak.
Other students say they are discouraged by the bill’s irrelevance to their specific situations. "This bill disguises itself as helping students deal with rising college costs, but it will not affect students like me who are incurring a lot of debt now,” said junior Andy Canales. “Once I graduate next year, I will still have to pay back my subsidized loans under the current interest rate. In a lot of ways, this bill is like a bandaid instead of a solution. It has no immediate impact on rising college costs."
“It doesn't seem like this bill will even really help me at all,” said junior Marco Matthews. “It won't start for five more years, and even though, it only comes in effect after graduation. I think the Democrats need to go back to the drawing board and figure out something that is more comprehensive to deal with college costs.”
With students already facing so much debt, lowering interest rates on federal loans could lighten the burden for future college graduates. Luke Swarthout is a lobbyist on higher education issues for the U.S. Public Interest Research Group. “The loan industry is highly profitable, and can sustain this round of cuts,” said Luke Swarthout, a lobbyist on higher education issues for the U.S. Public Interest Research Group.
The bill is estimated to help about 5.5 million students who take out loans each year.
The primary House bill passed in a landslide, 367-71 but students and parents await the final decision to be made by the Senate.
Submitted 01-25-2007
MALIBU, CA
