By Taimi Arvidson
Legislation passed by Congress earlier this month will likely leave students with more debt after college.
A measure tucked into a large spending bill proposes cuts of $12.7 billion out of the federal government’s student loan program beginning in July.
Northeastern students will not feel the results of the cuts immediately because the bill predominantly affects lenders, said Seamus Harreys, dean of Student Financial Services. However, he said those effects on lenders will be passed on to students down the road.
“You may see some lenders get out of the business because it’s not as profitable, which is dangerous,” Harreys said.
The first part of the bill, called the Deficit Reduction Act of 2005, will leave students with higher interest rates. The second part fixes the interest rate on Stafford loans at 6.8 percent. Currently, the interest rate varies with the economy. This change could prove to be either negative or beneficial for students, Harreys said.
Despite dire predictions, Harreys said it is difficult to pinpoint the bill’s effect because of larger economic factors like interest rates.
“You can’t take $12.7 billion out and not have an effect,” Harreys said.
The bill also benefits graduate students because it now offers them a chance to receive the Parent Loan for Undergraduate Students, formerly offered only to parents of dependent students. This loan is attractive to borrowers because it has a low, fixed interest rate, Harreys said.
Another change could leave the neediest students with fewer financial resources to pursue an education, Harreys said.
The Pell Grant, offered to low-income students nationwide, will now have a merit component that could exclude some students who need the grant. This part of the bill is still in development, Harreys said.
The Student Government Association (SGA) has been working against the bill by holding two phone-a-thons, one when the bill first went before the House of Representatives in December and another when it went before the Senate earlier this year. They had 20 to 30 students calling Washington, D.C. to tell senators student opinions on the bill and education funding.
The next step for SGA will likely be a letter-writing campaign against President George W. Bush’s budget bill, which also cuts funds from education, said Billy Haddad, SGA vice president for financial affairs.
“I wish Congress would pay a little more attention to education because we are the future,” Haddad said. “Education is really important and a lot of students rely heavily on funds the federal government gives us.”
Harreys applauded SGA’s efforts, and said they should continue despite the setbacks.
“They should not be discouraged and should continue to be in contact with Congress about these funds,” Harreys said. “By paying today we make an investment in the future.”
