House OK's plan to ease burden of college costs
Bill would halve loan interest rate
WASHINGTON -- Legislation to lower interest rates on student loans and increase aid to poor people who want to go to college won House approval yesterday.
To pay for the proposal, lawmakers would cut roughly $19 billion in federal subsidies to banks that issue government-backed student loans. Budget rules require nearly $1 billion of that savings to go toward reducing the federal deficit, but the rest would go to student benefits.
The bill passed 273 to 149. The legislation, along with a separate proposal approved yesterday by the House Appropriations Committee, would raise the maximum Pell grant from $4,310 per year to $5,200 by 2011. Pell grants go to poor students and do not have to be repaid.
The interest rate on federally subsidized loans for low-income and middle-class students also would be halved under the newly passed legislation. The rate would go from 6.8 percent to 3.4 percent over five years. The House previously voted to approve that cut, but the Senate never followed.
"This legislation provides a great deal of promise and a great deal of assistance and a great deal of resources to those students and their families who are sitting down and figuring out how they're going to pay," said Representative George Miller, Democrat of California and chairman of the Education Committee.
The bill follows promises that Democratic lawmakers made during the last election to help lower- and middle-class college students with tuition.
The legislation is part of a must-pass bill needed to meet spending targets in the federal budget. By linking the student assistance to the budget legislation, Democrats are ensuring that the student loan legislation cannot be held up by a minority of Republicans in the Senate.
Republicans contended yesterday that Democrats were exploiting the budget process. "Let's use the budget reconciliation for what it was made for: reducing the deficit and controlling spending," said Representative Paul Ryan, Republican of Wisconsin.
The Bush administration also opposes the bill, saying it spends too much on benefits that aren't tightly targeted to the neediest students.
A similar bill is pending in the Senate. It does not include the interest rate cut and would put more money into Pell grants. Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Senate education committee, has said he wants to move that legislation this month.
