Lower interest rates favor students

     The U.S. House of Representatives passed a bill two weeks ago to cut student interest rates in half over the next five years.  The “College Student Relief Act” dominated with a 356-71 vote.
      The life of this bill is contingent upon the Senate’s approval.  If it passes, interest rates for students will drop to 3.4 percent by 2012.  The reduction is limited to those with subsidized Stafford loans, which are loans based on financial need.
     According to the U.S. Public Interest Research Groups, students with Stafford loans will save on average around $4,000 by 2012. 
     Suzanne Pittman, director of financial aid at GCSU, said the decision was fantastic news. 
     “It’s in everybody’s best interest,” Pittman said.
Pittman feels the most important thing was that this decision makes college more accessible to those who need financial aid.  Some mention has been made of putting more money toward grants, which is money offered to students that they do not have to pay back.  Pittman added that it would be a big help to students.
     Even though the bill will only allow for five years of reduced rates, Pittman said this is due to the Sunset Provision, which means a law runs out after a specified time.
     “You would think by that time [2012] it would be fixed in legislation,” Pittman said.  “Hopefully by the time we get there, something will have happened.”
     The interest rate for students is already lower for students than other loan rates, but the bill, if passed, will focus on the needs of lower income students.
     “Students that have needs will be getting the money they need,” Pittman said. 
     Many students do not realize how much debt they can accumulate during their undergraduate years.  Pittman advises to only take the money when absolutely necessary.
     “The goal is not to set so much debt after you graduate,” Pittman said.
     Some students are eligible for more help than they truly need, and Pittman said it is wise to start small and increase the amount if you need it later. 
     “The important thing to do is to keep up with the cumulative amount through the years,” Pittman said.  “It is easy not to pay attention.”
     Many students have a cruel awakening come senior year when they learn how many loans they have taken out.  The financial aid office is a good source of information, Pittman said, and it is important for students to keep in touch with them and ask questions about issues they don’t understand. 
There is an exit counseling session for seniors to discuss the amount they have borrowed so they can know what to expect on their loans. 
     “You don’t want to go into shock when you graduate,” Pittman said.
     Amanda Van Dalen, a senior political science major, knows what it is like to have debt. Van Dalen said she has taken out around $7,000 in student loans.  Van Dalen plans  to live with her mom for a year after she graduates so she can pay it off immediately.
     Van Dalen also had a job throughout her years at GCSU and plans on continuing.  Even though she was working, it became necessary to take out loans.  Van Dalen said, however, that it is necessary to have a plan and a source of income.
     “You have to be smart when you take out loans,” Van Dalen said.  “You have to be logical and have a job.”
Van Dalen also said it is wise for students to keep their parents up to date on their loans and accept their advice about how much to take out.
     Honors student David Nguyen realized the benefit of the reduced rates, but at the same time was apprehensive about the potential danger of lowering them.
     Nguyen said some students accumulate so much debt that they are unable to finish school.
     “By lowering the interest rates for students loans, the government is allowing more students to stay in school and not worry so much about paying off their debts,” Nguyen said. 
However, some students can abuse the help.
     “Many people can abuse the system,” Nguyen said.   “Students may be tempted to take too large of a loan and eventually be stuck in debt with a larger loan, even if the interest rate is much lower.”   

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Posted by Colonnade Archives on Feb 2 2007. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry