An additional $5,800 could be added to the average student debt if Congress passes a resolution that would be the largest budget cut in student aid history, according to studentaidaction.com.If passed, House Resolution 609 would cut $9 billion from federal student loans programs, which would increase interest rates from 6.8 percent to 8.25 percent. The resolution would also put a $6,000 cap on Pell Grants, which are need-based aid that doesn’t need to be repaid, according to the United States Student Association.
The Senate could vote on the resolution as early as Thursday and the House of Representatives as early as next week, but it could be pushed back, said Micah Marin, a TCU financial aid adviser.
Right now, the priorities in Congress are hurricane relief and the war in Iraq, so education legislation has been put on the back burner, Marin said.
“If the bill is passed, the changes won’t go into effect until July 1,” Marin said. “So December graduates might want to consolidate and lock into a rate sooner rather than later.”
This bill poses the biggest threat to students with unsubsidized loans, or loans that the government doesn’t pay the interest on while the student is in school because the rates are not fixed, Marin said.
The rising cost of a college education is partly to blame for the financial cuts, said Student Government Association President David Watson.
“I feel many schools have taken advantage of the great loans students are able to receive and continue to raise tuition at exorbitant rates,” Watson said. “It is no wonder that our federal government cannot continue to support such large loans at low interest rates.”
If federal loan interest rates increase to 8.25 percent, students might want to consider the College Access Loan that has a 5.25 percent interest rate but is limited to Texas residents who are on a scholarship and have a co-signer, Marin said.
Sixty-six percent of private four-year college students receive student loans. Those loans average more than $7,000, according to the U.S. Department of Education.
