.S. college students on financial aid may see a hike in their student loan interest rates next school year if Congress decides to pass the Budget Reconciliation Spending Cuts Bill next month.
If passed, the bill would cut $12.7 billion from the 2006-07 federal student loans budget. Congress is considering such cuts as a way to balance the budget and the U.S. House of Representatives is slated to vote on the bill Feb. 1.
Passage of the bill by Congress could increase student loan interest rates by $5,800 to $6,000 more per student, said local Congresswoman Lois Capps (CA-23). Capps said she believes the budget cuts are unnecessary and detrimental to students.
“Currently, 400,000 Americans are being denied the chance to attend college because they cannot afford it, and college costs are increasing far faster than the rate of inflation,” Capps said. “Students and their parents are already struggling to keep up with soaring tuition, high textbook prices and a variety of other demands.”
Capps’s press secretary Shannon Lohrmann said the bill would also reform a variety of federal programs, such as Medicaid, in addition to imposing higher fees on students receiving federal loans.
“There are scores of programs adversely affected,” Lohrmann said. “We’re talking about food stamps, low-income meals for students, health care for the elderly and low-income families.” UCSB Associated Students organizing director Bill Shiebler said he thinks the bill would dramatically change interest rates and financial aid packages for university students. Shiebler, a third-year sociology major, said student loan interest rates would rise from 4.7 percent to 6.8 percent and would affect 67,000 of UC system’s 200,000 students.
Shiebler said members of the United States Student Association (USSA) spoke with students nationwide and found that several will have to spend less time studying and more time working at jobs in order to pay off the increased loans.
“Students will also have extended periods of enrollment because they can’t afford all the classes,” Shiebler said. “There will be a trend of less class, more work and students will end up having to pay off even more loans.”
UCSB’s Associated Students External Vice President of Statewide Affairs Felicia Cruz said the average student is $20,000 in debt upon graduation. Cruz, a fourth-year sociology and history major, said she, too, is worried about the effects the bill may have on financial aid students.
“On average, it takes students 10 years to pay off their loan and with the increase it’s going to take students even longer to pay off their college expenses,” Cruz said. “More students will be forced to find competitive, high paying jobs straight out of college, instead of public interest jobs.”
First-year comparative literature major Hannah Coffelt said she is currently receiving a loan from the federal government and does not yet know how she will pay off her debt.
“Eventually I think it’s something I’m going to have to worry about when school is over,” Coffelt said. “It’ll be really hard and it is something I’m going to put off for the future.”