(Washington D.C.)- Today, the Democratically-controlled House of Representatives passed H.R. 5, the College Student Relief Act, on a broad bipartisan vote of 356 to 71. This measure will cut the interest rate on subsidized student loans for undergraduates in half over the next five years -- from 6.8% today to 3.4% by 2011. Under this bill, which would take effect starting in July, the average Michigan student starting school in 2007 would save $2,190 over the life of the loan; those starting in 2011 would save $4,240 over the life of the loan, according to a report by US PIRG. This aid is provided at no additional cost to taxpayers as the bill is fully offset by trimming the subsidies paid to lenders and guaranty agencies on these student loans by the federal government.

"One of the pillars of the New Direction for America was a promise to make higher education more affordable and accessible so that more Americans can advance their education and enhance their economic future in an increasingly competitive global economy," said U.S. Rep. Sander Levin (D-Royal Oak), an original cosponsor of the bill. "At a time when college tuition is skyrocketing - increasing by 35% at four-year public institutions over the past five years - it is clear that Congress needs to act and act now to make college more affordable."

"For Michigan, the benefits of this loan relief couldn't be clearer. Two-thirds of the jobs created in the next decade will require post-secondary education and training. In Michigan, for about 144,000 student borrowers who will graduate from Michigan colleges and universities, this bill would generate savings of over $4,200 on average over the life of their loans. For example, these savings will benefit close to 1,200 students at Lawrence Tech and 3,500 students at Oakland University," concluded Levin. 

More and more students are staggering under the load of student debt - the typical student borrower now graduates from college with $17,500 in debt. From 2004-2005, there were 143,699 subsidized loan borrowers at 4-year institutions in Michigan, where the average loan debt for federally subsidized loans for a 4-year graduate in Michigan is $13,256. H.R. 5 would save these students $2,190 for students starting in 2007 and $4,240 for students starting in 2011 over the life of their loans, according to US PIRG.

This bill cuts the interest rate in half in five steps:  from 6.8% to 6.12% in 2007; 5.44% in 2008; 4.76% in 2009; 4.08% in 2010; and 3.4% in 2011.  Studies show the number one reason students fail to attend college, or are forced to drop out of college prior to graduation, is cost. Tuition and fees skyrocketing make it harder for working families to send their kids to college.  Tuition and fees at public universities have increased by 41 percent after inflation since the 2000-2001 school year and tuition and fees at private universities have jumped by 17 percent. Over the last five years, the interest rates on student loans have jumped by almost 2 percentage points - further increasing the cost of college. 
 

(####)

Home Page  |  Press Releases