Congress Approves Cuts to Student Loan Programs
TRIO programs, minority-serving institutions lose funding with automatic 1 percent cut
By Charles Dervarics
College students and their families will face higher student loan costs as the result of multiple recent congressional moves. The moves will also spell small cuts for other core financial aid programs.
Before adjourning for the winter holiday break, the House of Representatives and the Senate approved $12.7 billion in long-term reductions to student loan programs (see Diverse, Jan. 12). Part of a $40 billion deficit reduction bill, lawmakers agreed to raise interest rates on parent loans from 7.8 percent to 8.5 percent and set an interest rate of 6.8 percent on Stafford Loans. The Stafford Loans currently cost less than other loans because they follow market rates.
Some of the lenders under the Stafford program have interest rates below 5 percent, says Jasmine Harris, legislative director of the United States Student Association.
The reaction to the bill from education advocates was immediate and angry. Noting that costs at many public colleges are increasing at double-digit annual rates, National Education Association President Reginald Weaver says the move sends a negative signal about the value of higher education.
“Congress cannot ask students to strive for college without the funding they need to attend college,” he says.
