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Students and parents will pay higher interest on college loans starting
this July if President Bush signs into law new budget legislation
passed by the House of Representatives yesterday.
But students majoring in math, science and certain foreign
languages, as well as undergraduates from “rigorous” high schools, may
also be eligible for new federal grants of up to $4,000 provided by the
same bill.
Harvard students will be less affected by these measures than
students at public universities and smaller colleges because Harvard
offers students substantial financial aid apart from federal grants and
loans, Harvard’s director of federal and state relations, Suzanne Day,
said.
Day said that Bush has expressed support for the legislation and is expected to sign it into law.
Harvard students with federal loans will be affected by the new
measure if it is signed into law and will face interest rate increases
of over 2 percent starting July 1.
According to the Harvard College Financial Aid Office website,
approximately 49 percent of Harvard students graduate with some loan
debt. The median debt for the Class of 2005 was $6,400, according to
the website.
The interest rates will rise to a fixed rate of 6.8 percent for student loans and 8.5 percent for loans to parents, Day said.
Interest rates for the 2005-2006 year were 4.7 percent for
students and 6.1 percent for parents, according to the College’s
financial aid website.
The legislation has sparked protest from higher education
advocacy groups because student loan programs face a net cut of
approximately $12 billion, which accounts for nearly a third of the $39
billion reduction in federal spending.
Luke Swarthout, a higher education associate for the State
Public Interest Research Group, which lobbied strongly against the
legislation, called the bill “the largest raid on student aid in
history.”
According to Swarthout, the measures increase the financial
burden on students and families trying to finance college educations in
order to pay for tax cuts for wealthy Americans.
“It’s incredibly misguided policy,” he said.
But Republicans have argued that the cuts are a necessary part
of responsible governance and that many of the programs cut were
outdated and inefficient.
“The Deficit Reduction Act seeks to curb the unsustainable
growth rate of mandatory programs that are set to consume 62 percent of
our total federal budget in the next decade if left unchecked,” said
Rep. Adam H. Putnam, R—Fla, according to the Associated Press.
Reiterating the views of many in the higher education
community, Day, the Harvard official, said in an interview last month
that money cut from certain aspects of the student loan program should
have gone to fund education initiatives—not toward deficit reduction or
other measures such as tax cuts.
“We believe those dollars are better reinvested in higher
education and making college more affordable and accessible for all
students,” Day said.
This perceived loss for higher education comes a day after
the announcement of initiatives to increase American scientific
competitiveness in Bush’s State of the Union address—an announcement
that higher education advocates praised.
“We’re disappointed that the Congress has voted to take
significant resources out of the student loan program, particularly
when there is increasing recognition of the connection between higher
education and our nation’s global competitiveness,” said Association of
American Universities spokesman Barry Toiv ’77-’78.
In total, the legislation cuts over $20 billion from student
loan programs, but it also provides $8 billion for new programs that
will benefit some students, Day said.
Starting in 2007, federal loan limits increase from $2,625 to
$3,500 for college freshmen and from $3,500 to $4,500 for sophomores.
The measures also include the creation of new Science and
Mathematics Access to Retain Talent (SMART) Grants for students
majoring in “science, math, technology, engineering, or a foreign
language determined to be critical to the national security of the
United States,” according to the legislation.
Juniors and seniors in these fields already eligible for the
need-based federal Pell grants could receive additional grants of
$4,000.
The legislation also creates new grants of up to $1,300 for
needy college freshman and sophomores who completed a “rigorous
secondary school program of study,” according to The New York Times.
According to the legislation, funding for these grants could
be available for the 2006-2007 academic year, Day said. But the
implementation of the new measures will be complicated, she added,
since the Department of Education must create guidelines such as
specifying which languages should be considered critical to national
security or what elements of a school’s curriculum makes it rigorous.
Day said that the creation of federal grants targeted to
certain students represents a new and potentially troublesome direction
in federal education funding, especially because funding for the Pell
grants available to all eligible needy students has remained flat over
the past few years.
“If the trend is to fund programs with a more specialized focus, that could undermine overall access,” Day said.
The legislation passed by 216 to 214 in the House yesterday
afternoon, in a narrow and primarily partisan vote, with Republicans
supporting the bill and Democrats opposing it.
—Staff writer Lois E. Beckett can be reached at lbeckett@fas.harvard.edu
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