Over 100 Georgetown students will rally on Capitol Hill today in opposition to a House budget proposal announced last week that could increase some college students’ costs by thousands of dollars.
The proposal, issued by the House Education and the Workforce Committee, would maintain caps for Stafford Loan interest rates at the current 8.25 percent, reversing a bipartisan decision made in 2001 to lower interest rates to 6.8 percent by next year. It would also achieve savings by reducing federal subsidies to lenders.
Democrats in the House and student interest groups across the country said they fear that decreased lender subsidies will drive up costs for students who obtain and consolidate loans. According to the Student Public Interest Research Group, a financial aid lobbyist organization, the House proposal could increase the amount the average student borrower pays for loans by $5,800 every year.
The committee’s proposal is part of the budget reconciliation process, in which both the House and Senate agree on appropriations for the next fiscal year. The proposed cuts would result in approximately $14.5 billion in savings to help reduce the U.S. budget deficit. The Senate is expected to consider its budget reconciliation bill this week.
“We need to secure the long-term future of the federal student loan programs, and we can only accomplish that by placing them on a more solid financial foundation,” committee Chair John Boehner (R-Ohio), who supports the proposal, said in a committee session last Wednesday.
Rep. George Miller (D-Calif.), the senior Democrat on the committee, claimed the vote was designed to rectify the Bush administration’s runaway spending on tax cuts.
“Student financial aid programs are not a slush fund for Congress to raid whenever it wants tax cuts for the wealthy,” iller said.
Alexa Marrero, press secretary for the House committee, said that the proposal would not affect funds for on-campus aid programs, such as Federal Work-Study, Pell Grants and Perkins Loans.
“There are no cuts to federal student aid,” she said. “The $14.5 billion in savings found within the student loan programs are accomplished by reducing subsidies paid to lenders, improving the risk sharing structure between lenders and the federal government . and stabilizing the interest rate structure.”
Marrero added that by maintaining the current variable interest rate for Stafford Loans capped at 8.25 percent, students will be able to “access the lowest student loan interest rates in history in the last few years.”
The current interest rate is 4.7 percent, and if the House proposal fails, students will pay a fixed interest rate of 6.8 percent.
Scott Fleming, university assistant to the president for federal relations, warned that high caps for student loans could be detrimental for students as interest rates continue to rise.
“This is an instance where we think that it’s important for the university to join with students in advocating for policies that are advantageous for our students,” he said.
Fleming called the budget cuts for higher education – which represent about a third of all cuts in the reconciliation process – an “inordinate hit.”
He added that the cuts may discourage some students from attending college and thus exclude the government from the higher tax revenues it could have received from a would-be college graduate.
“We’re going to make changes that will save the government $5,800 [per student], but in the process discourage someone from going to college and making higher earnings, which would be taxable,” he said. “This strikes me as very short-sighted.”
Georgetown students will take three buses to Capitol Hill to join students from area universities, including American, Howard, George Washington and Catholic, in the “Stop the Raid on Student Aid” rally today.
GU College Democrats Vice President Timothy D’Arduini (SFS ’06), who plans to attend the rally, said that the sheer size of the $14.5 billion cut to student aid is cause for protest.
“It’s an incredible amount of money to expect students to lose,” he said. “It affects students who don’t receive aid too because we don’t want to have the university make up for it by increasing tuition.”
D’Arduini, who uses a Stafford Loan as part of his Georgetown financial aid package, said that his family’s finances would be strained by increases in loan payments.
“I come from a family of five children, and I’m the first in my family to ever go to college,” he said. “There’s no way I could ever dream of attending such a prestigious university as Georgetown without receiving assistance from the government and Georgetown.”
Andrew Gold (SFS ’09), who also receives financial aid and is a member of Georgetown University Legislative Advocates, which is co-sponsoring the rally today, said his family will also be affected.
“It’ll be money that I have to pay instead of the government,” he said. “It’ll be harder.”
Dante Randazzo (COL ’07), external policy advisor for GUSA, helped organize a student gathering at the Capitol last Wednesday when the House education committee was meeting.
The Student Association is co-sponsoring the rally along with GULA. GUSA also helped organize a call-in yesterday in which students called their congressmen to urge them to oppose cuts to student aid.
“Student interests extend beyond this school’s gates,” Randazzo said.
Erin Delmore contributed to this report.
