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WASHINGTON, D.C. – Today Congresswoman Lois Capps will vote to cut the cost of student loan interest rates. The legislation, the College Student Relief Act of 2007, H.R. 5, is a critical first step in making higher education more affordable in a fiscally responsible manner. This is the fifth piece of legislation considered as part of the Democrats ambitious “first 100 hours” legislative agenda.
“I’m elated that one of the first pieces of legislation passed by this new Congress reduces the interest rates of student loans and in doing so, reduces some of the burdensome costs of higher education for our students and their families,” said Capps. “This is a critical first step in making a college education accessible and affordable for all of our students. It is important to note that this is only the first step – we need to do much more to open the doors of opportunity that a college education provides. We should all be committed to breaking down the financial barriers to higher education. The truth is investment in education is merely a down payment on a more prosperous future for all Americans.”
Specifically, the College Student Relief Act of 2007 would cut interest rates on need-based federal loans for undergraduate students from 6.8 percent to 3.4 percent in five steps: from 6.8 percent to 6.12 percent in 2007; 5.44 percent in 2008; 4.76 percent in 2009; 4.08 percent in 2010; and 3.40 percent in 2011. At U.C.S.B, the average student borrower has a $15,649 loan. Following the rate reduction beginning in July 1st, 2007, incoming Freshman for the fall of 2007 can expect to save $2,580 over the life of their loan while incoming freshman in the fall of 2011 can expect to save $5,000 over the life of their loan. Borrowers with existing student loans can also save if the new legislation is enacted, if they consolidate their loans after the lower rate goes into effect.
The bill comes at a critical time for America’s low-income and middle-class families. Tuition and fees at four-year public colleges and universities have risen 41 percent – after inflation – since 2001. The typical student now graduates with $17,500 in total federal student loan debt. According to past estimates from the Department of Education, as many as 200,000 would-be students are forced to delay or forgo attending college altogether due to the cost.
Half of the student-loan borrowers who would benefit under this legislation have family incomes between $26,000 and $68,000, according to the Congressional Research Service; the median family income of borrowers was $45,000 in 2003-2004. This is well below the overall U.S. median family income of approximately $54,000, according to the Economic Policy Institute.
In addition to reducing the interest rates for student loans, Democrats will also work to increase the maximum Pell Grant scholarship and take other important steps to reduce the financial barriers to a college education
This legislation is paid for in full by making reductions in certain lender and guaranty agency subsidies in order to make the student loan program more efficient and cost effective for students and for American taxpayers.
Capps is joined in supporting this much needed legislation by dozens of organizations, including the American Council on Education, National Association of Independent Colleges and Universities, American Association for State Colleges and Universities, American Association of Community Colleges, Alliance for Equity in Higher Education, Hispanic Association of Colleges and Universities, College Board, College Parents of America, and the Institute for Higher Education Policy.
Congresswoman Lois Capps is nurse who spent 20 years working in Santa Barbara area public schools.
A Copy Of The Congresswoman’s Prepared Floor Speech Follows:
Statement of Rep. Lois Capps
HR 5 – College Student Relief Act of 2007
January 17, 2007
Madam Speaker, I rise today in strong support of this legislation to reduce interest rate for student loans.
In my previous careers I spent years teaching and caring for students from all walks of life. I have seen firsthand the value of a quality education for all students. A lack of a good education hurts not only today’s students and tomorrow’s workers, it hurts our country’s efforts to remain competitive in an increasingly global market.
Madam Speaker, college is not for everyone and not everyone needs a degree to achieve their goals. But no one should be denied one simply because they can’t afford the cost of tuition or because they fear being overburdened by tens of thousands of dollars in student loans.
We have all seen the rising cost of education -- 41% percent in the last 6 years alone. Students today graduate with greater and greater debt which not only hamstrings them but also makes it hard for occupations that need highly skilled gradates but can only offer modest salaries. For example, nearly 32% of graduates pursuing teaching careers can’t afford to repay their student loans on a starting teacher’s salary. And if new graduates can’t afford to work in the careers where we need them the most – like teaching, nursing, or in social work – then all Americans will suffer.
By passing this bill, students starting school this year will be saving an average of $2,490 a year and by 2011 we will be saving students an average of $4,830 over the life of their loans.
I urge all of my colleagues to vote YES on H.R. 5 and help our students pursue their dreams and build our country.
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Pictured above: (center) Congresswoman Capps meets with Central Coast firefighters to discuss emergency preparedness.
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