"An overwhelming majority" of Americans believe the first priority of financial aid is to help low- and middle-income students afford college, rather than to subsidize expenses for college graduates, according to an April 21 press release issued by the House Committee on Education and the Workforce.
That finding is based on information gathered through the committee’s College Cost Central Web site. A Web survey found that 69% of the 635 respondents said financial aid "ought to be directed toward incoming students, with only 31% indicating graduates should be the priority."
Whether to continue subsidizing borrowers in repayment through a low, fixed interest rate has become a hot-button topic as lawmakers undertake this year's Higher Education Act reauthorization.
"These results give additional momentum to the growing bipartisan consensus on our committee among legislators concerned that the ballooning cost of fixed-rate consolidation loans is a direct threat to college access for low and middle-income students, who are facing an uphill fight against soaring tuition costs," said Committee Chair John Boehner (R-Ohio).
The Democratic leadership has vehemently opposed an interest rate switch. Rep. George Miller (D-Calif.), the senior Democrat on the committee, said on April 9 that "scrapping students' ability to consolidate loans at low fixed rates altogether--a proposal being pushed on Capitol Hill by major banking institutions--will place an excessive burden on students."
Boehner's statement is just the latest parry in the on-going debate over financing consolidation loans:
- A March 24 Congressional Research Service (CRS) analysis found that students with average undergraduate debt would have to pay $5,484 more in interest over the life of the loan under a variable interest rate.
- On March 17, the education committee held a hearing on consolidation loans. In an attempt to curb burgeoning program costs, Republican lawmakers are expected to introduce a measure that would require graduates to consolidate their student loans at a variable interest rate, rather than the current fixed rate.
- In December 2003, the General Accounting Office (GAO) released GAO-04-101, which recommended that the Secretary of Education "assess the advantages of consolidation loans for borrowers and the government in light of program costs and identify options for reducing federal costs."
By Elizabeth B. Guerard
NASFAA Assistant Director of Communications
Posted April 22, 2004 on
www.NASFAA.org, the Web Site of the
National Association of Student Financial Aid Administrators (NASFAA).
Copyright 2004. Redistribution to non-NASFAA institutions is prohibited
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