On January 17, the House approved, 356-71, legislation (H.R. 5) that would reduce interest rates on need-based federal college loans.
Sponsored by Rep. George Miller (D-CA), H.R. 5 would cut interest rates on undergraduate loans by half over a period of five years. Rates would drop incrementally from the current rate of 6.8 percent to 3.4 percent by 2011. To offset the cost of the reduction in interest rates, the bill would implement several measures, including increasing a one-time loan fee for lenders by 0.5 percent on July 1, 2007.
Noting that there has been a 41 percent increase in the cost of education during the past six years, Rep. Lois Capps (D-CA) said, “By passing this bill, students starting school this year will be saving an average of $2,490 a year and by 2011 we will be saving students an average of $4,830 over the life of their loans. I urge all of my colleagues to vote ‘yes’ on H.R. 5. Help our students pursue their dreams and build our country.”
Rep. Virginia Foxx (R-NC) stated, “All we are doing is inviting colleges and universities to increase their tuition and fees…We are not going to help students, we are not increasing accessibility for poor students. If we were, we would be putting this into either work-study or Pell. That is how you really help the low-income students who are trying to go to school, not by decreasing to 3.4 percent for 6 months, the loans.”