Student Loans on the Chopping Block
While most college students were on winter breaks, the US Senate was debating over a drastic reduction in student loan opportunities. On December 21, 2005 in a 51-50 vote the US Senate passed a bill which included $12 billion in student loan cuts from the federal budget. Vice President Cheney cast the tie-breaking vote, while five Republicans sided with the Democrats who unanimously opposed the bill.
A second blow was wielded this week when the House passed a bill also in favor of the student loan cuts. While 13 moderate Republicans joined House Democrats in a no vote, not enough opposition was gained and the bill passed 216 to 214.
The drastic measure eliminates $2.2 billion in critical funds used to administer the federal student loan programs. Additional changes included a new 1% insurance fee that student borrowers must pay to guarantee agencies and raising the interest rate cap for parents who take out federal education loans for their children from 7.9 percent to 8.5 percent.
The bill outlines a total of $39 billion in budget cuts which besides the student loan cuts, drastically reduces Medicaid and Medicare programs for low income and senior Americans.
“The President spoke last night about the importance of education to sustaining America’s competitiveness in today’s global economy. Now, less than 24 hours later, this House has enacted the largest raid on student aid in history even while millions of American families are struggling to afford the rising cost of college,” said Rep. Ron Kind, a member of the House Education and the Workforce Committee.
While opposition to the measure has been strong, Republican leadership ensured that these critical aid programs have been cut. The measure is expected to be signed by President Bush next week.