Thursday, January 18, 2007

College Student Relief Act of 2007

House Votes to Cut Interest Rates on Student Loans in Half

WASHINGTON, DC -- More than 5 million students nationwide would each save thousands of dollars in college loan interest costs under legislation overwhelmingly approved today by the U.S. House of Representatives. The legislation, introduced by Rep. George Miller (D-CA), would cut interest rates in half on need-based federal college loans over the next five years. The House voted on the bill as part of the Democratic leadership's "Six for '06" package of policy initiatives for the first 100 legislative hours of the new Congress.

Miller, the Chairman of the House Education and Labor Committee, said today that the 356-71 vote was an important first step towards making college more affordable for students and their families.

. . .

The legislation, the College Student Relief Act of 2007, H.R. 5, would cut interest rates on need-based federal loans for undergraduate students from 6.8 percent to 3.4 percent in five steps: from 6.8 percent to 6.12 percent in 2007; 5.44 percent in 2008; 4.76 percent in 2009; 4.08 percent in 2010; and 3.40 percent in 2011. Once fully phased in, these cuts would save the typical borrower, with $13,800 in need-based federal student loan debt, $4,400 over the life of the loan.

The bill comes at a critical time for America's low- and middle-income families. Tuition and fees at four-year public colleges and universities have risen 41 percent -- after inflation -- since 2001. The typical student now graduates with $17,500 in total federal student loan debt. According to past estimates from the Department of Education, as many as 200,000 would-be students are forced to delay or forgo attending college altogether due to the cost.

Half of the student-loan borrowers who would benefit under this legislation have family incomes between $26,000 and $68,000, according to the Congressional Research Service; the median family income of borrowers was $45,000 in 2003-2004. This is well below the overall U.S. median family income of approximately $54,000, according to the Economic Policy Institute.

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