From the State PIRG's Higher Education Project:
The Senate is scheduled to vote on the budget reconciliation conference report Wednesday morning. The House voted early Monday morning to pass reconciliation by a vote of 212 to 206. The budget bill includes $12.7 billion in cuts to the student loan program, both the largest cut in the history of the loan programs and the largest single cut in the legislation. The bill derives approximately 70% of its savings from higher loan interest rates for borrowers and redirecting excessive student and parent payments to private lenders. While Congress directs several billion dollars to pay for grant aid and some student borrower benefits, the bulk of the cuts will be sent out of the program to pay for tax cuts for the wealthiest Americans.
The bill generates at least 70% of its savings by making loans more expensive for borrowers: approximately $15 billion out of the $21 billion in total cuts. Specifically the bill generates:
* Almost $13 billion from excessive subsidy payments that student and parent borrowers make to lenders. This bill uses this money to pay for new tax cuts rather than sending it back to students through additional need-based grant aid or lower interest rates.
* Approximately $2 billion by increasing the parent loan interest rate from 7.9% to 8.5%.
Two other cuts that won’t necessarily come from students but could have a significant impact on borrowers are:
* $2.2 billion in cuts to critical student loan delivery funds used to administer the federal student aid programs. Without these funds the administration of the federal student aid programs is in jeopardy.
* $1.4 billion by charging guarantee agencies collect a 1% insurance fee on all loans. Lenders could potentially pass on this cut directly to student borrowers.
The hit on students and parents are part of a larger package of more than $40 billion in cuts to federal programs like student loans, Medicaid and food stamps. A corresponding package of $50 to $70 billion in new tax cuts for some of the wealthiest Americans will be voted on early in 2006.
The budget measure will direct a small portion of the student loan cuts back to students. The bill spends $3.7 billion on grants for students majoring in math, science and foreign languages. In addition, the bill will gradually lower charges for some students, known as origination fees, over the next five years. Finally the bill retains 6.8% as the cap on student interest rates, a measure that will help protect students as interest rates continue to rise.
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Senate Voting Wednesday Morning on $12.7 Billion in Student Loan Cuts
Largest Cuts to Student Aid in History
The Senate is scheduled to vote on the budget reconciliation conference report Wednesday morning. The House voted early Monday morning to pass reconciliation by a vote of 212 to 206. The budget bill includes $12.7 billion in cuts to the student loan program, both the largest cut in the history of the loan programs and the largest single cut in the legislation. The bill derives approximately 70% of its savings from higher loan interest rates for borrowers and redirecting excessive student and parent payments to private lenders. While Congress directs several billion dollars to pay for grant aid and some student borrower benefits, the bulk of the cuts will be sent out of the program to pay for tax cuts for the wealthiest Americans.
The bill generates at least 70% of its savings by making loans more expensive for borrowers: approximately $15 billion out of the $21 billion in total cuts. Specifically the bill generates:
* Almost $13 billion from excessive subsidy payments that student and parent borrowers make to lenders. This bill uses this money to pay for new tax cuts rather than sending it back to students through additional need-based grant aid or lower interest rates.
* Approximately $2 billion by increasing the parent loan interest rate from 7.9% to 8.5%.
Two other cuts that won’t necessarily come from students but could have a significant impact on borrowers are:
* $2.2 billion in cuts to critical student loan delivery funds used to administer the federal student aid programs. Without these funds the administration of the federal student aid programs is in jeopardy.
* $1.4 billion by charging guarantee agencies collect a 1% insurance fee on all loans. Lenders could potentially pass on this cut directly to student borrowers.
The hit on students and parents are part of a larger package of more than $40 billion in cuts to federal programs like student loans, Medicaid and food stamps. A corresponding package of $50 to $70 billion in new tax cuts for some of the wealthiest Americans will be voted on early in 2006.
The budget measure will direct a small portion of the student loan cuts back to students. The bill spends $3.7 billion on grants for students majoring in math, science and foreign languages. In addition, the bill will gradually lower charges for some students, known as origination fees, over the next five years. Finally the bill retains 6.8% as the cap on student interest rates, a measure that will help protect students as interest rates continue to rise.
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posted by Hans Riemer at 10:32 AM
2 Comments:
If students are the future of this country shouldn't they have all the help they can get in getting an education in colledge? I think its wrong to take money away from kids who's families aren't rich enough to pay them thru college.
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