The US House of Representatives voted yesterday to reduce interest rates for student borrowers. The College Student Relief Act of 2007 passed yesterday in a vote of 356 to 71. All of the Democrats and 124 Republicans voted in favor of the bill, which will apply to the 5.5 million Stafford loans given to students whose families earn between $26,000 and $68,000 per year. The bill establishes gradual reductions in the interest rate over a five-year period, bringing the rate down from 6.8 percent to 3.4 percent. The US Public Interest Research Group estimates that, under the new act, the average student would save about $2,300 in interest payments on a 15-year loan.
“Today’s bipartisan vote to cut the interest rate in half on federally subsidized student loans over the next five years will help make a college education more affordable and more accessible for our next generation of leaders and innovators,” said Speaker Nancy Pelosi (D-CA) of the act. “At a time when college tuition continues to skyrocket, this crucial legislation will help remove some of the barriers to a higher education’ Our young people should be driven by their dreams, not weighed down by debt.”
Senator Edward M. Kennedy (D-MA), who chairs the education committee, has scheduled a Senate hearing on similar legislation for next week. According to the Associated Press, Sen. Kennedy intends to introduce broader legislation that would also reduce the interest rates on student loans, and additionally increase the maximum Pell grant from $4,050 to $5,100 and encourage schools to participate in a government-based loan program, opposed to a bank-based program.
The House bill was the fifth of Speaker Nancy Pelosi’s six objectives for the first 100 hours of the US Congress to pass. The House has already voted to enact the recommendations of the 9/11 Commission, increase the minimum wage, expand stem cell research, and negotiate lower prescription drug prices for senior citizens. Her sixth objective, which is to end subsidies for big oil and invest in alternative and renewable energy sources, will be on Congress’ agenda today.