Washington, DC – Today, local Congresswoman Kirsten Gillibrand announced that interest rates on need-based federal student loans will drop from 6.8% to 6% on July 1st.  This automatic decrease was part of the College Cost Reduction and Access Act [H.R. 2669], which Congress passed last year, and will gradually reduce interest rates in half until they reach 3.4% in 2011.

“I am pleased that this Congress was able to lower interest rates and significantly help the thousands of Upstate New York students who acquire student loans. Young adults should not be saddled with an unmanageable debt burden when they graduate from college, and this decrease in interest rates will allow more students to choose a career in public service or continue on with their education” Congresswoman Gillibrand said.  “A college education should be affordable and accessible to every young person and their family.  As a mother of two young sons, I understand that every parent wants to give their child the best education, and I will continue to work on making college affordable for everyone so every student can reach their God given potential.”

Once the interest rate cuts are fully phased-in, the typical student borrower in New York will save $4,570.  In New York, students with need-based scholarships from a state public school graduate with an average debt of $14,276.  Each year, over 240,000 New York students take out need-based loans at four-year public schools.

The College Cost Reduction and Access Act is the largest increase in student aid since the GI Bill.  In addition to cutting student loan rates in half, the bill increases the PELL Grant scholarship by $500, which will benefit over 420,000 New York students; provides tuition assistance for undergraduate students who agree to teach in a public school; and provides loan forgiveness for public servants, including police officers, firefighters, first responders, prosecutors, nurses, early childhood educators, and public defenders. 

Gillibrand has been a leader on ensuring that higher education is affordable for Upstate New York families.  Last year, she introduced the College Affordability Tax Relief Act [H.R. 3388], which would make up to $10,000 in college tuition tax deductible for middle class families.