U.S. Seeks to End Student Loan Break Worth $1.3 Billion
The Bush administration has proposed ending fixed-rate consolidations of federal student loans just as interest rates are forecast to plunge to record lows. With lower interest rates, student borrowers could save thousands of dollars over the life of their loans.</br></br>White House officials raised the idea of ending the government- subsidized consolidations as part of a supplementary spending bill for the current fiscal year being developed by the House Appropriations Committee.</br></br>The proposal is one of three preliminary suggestions forwarded by the White House to deal with a $1.3 billion shortfall in the Pell Grant program for low-income students. It ran into immediate opposition from congressional Democrats, some Republicans and student advocates who said it would effectively raise interest rates for the estimated 700,000 borrowers who consolidate, or refinance their total federal student loan debt, each year.</br></br>"At a time when we are looking for ways to make college more affordable, it is inconceivable that the Bush White House would send a proposal to Congress that would make it harder for working families to pay tuition bills," Sen. Robert G. Torricelli (D-N.J.) said yesterday.</br></br>Rep. George Miller (Calif.), the ranking Democrat on the House Education and Workforce Committee, called the proposal "grossly unfair to students" who borrowed billions "with the promise they could consolidate and get a better interest rate. Now, when they have to pay back the loans, the Bush administration wants to change the rules and increase repayment costs to graduates."