House Votes to Cut Interest Rates on Student Loans in Half
College Student Relief Act of 2007 Would Make College More Affordable for Low- and Middle-Income Students at No New Cost to Taxpayers

January 17, 2007

WASHINGTON, DC -- More than 5 million students nationwide would each save thousands of dollars in college loan interest costs under legislation overwhelmingly approved today by the U.S. House of Representatives. The legislation, introduced by Rep. George Miller (D-CA), would cut interest rates in half on need-based federal college loans over the next five years.  The House voted on the bill as part of the Democratic leadership's "Six for '06" package of policy initiatives for the first 100 legislative hours of the new Congress.

Miller, the Chairman of the House Education and Labor Committee, said today that the 356-71 vote was an important first step towards making college more affordable for students and their families.

"Democrats have said that we are going to take America in a new direction. We have said that we are committed to strengthening America's middle class. Today, by voting to cut student loan interest rates in half, we have shown that we meant what we said," said Miller. "With this vote, the House took the first step towards guaranteeing that every student who is qualified to go to college will be able to afford to go."

The legislation, the College Student Relief Act of 2007, H.R. 5, 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. Once fully phased in, these cuts would save the typical borrower, with $13,800 in need-based federal student loan debt, $4,400 over the life of the loan.

The bill comes at a critical time for America's low- and middle-income 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.

The bill is paid for by making the federal student loan program more efficient and effective for students and the government. It carries no new cost for taxpayers.

Miller's bill is the first component of Democrats' plans to make college more affordable and accessible. Miller said that during the 110th Congress, Democrats plan to raise the maximum Pell Grant scholarship, and work with students, colleges, and other relevant stakeholders to examine increasing tuition costs.

"Our work will not be done until every qualified student can afford to go to college," said Miller. "That's our goal because that's the right thing to do for students, but also because it's the smart thing to do for our country, our economy, and our collective future."

FOR IMMEDIATE RELEASE
Contact: Tom Kiley / Rachel Racusen
2181 Rayburn House Office Building
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