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U.S. House will decide fate of students’ financial aid
By Kelly Griffith
Students could soon find themselves paying higher interest rates for student loans after the Senate voted 51-50 on Nov. 3 to cut $12.7 billion from student aid next year and $39.7 over five years.
According to The News & Observer on Jan. 9, the interest rate would jump to 6.8 percent from the current 4.3 to 5.3 percent.
In a letter posted Jan. 19, National Association of Student Financial Aid Administrators President Dallas Martin said the $12.7 billion cut is more than one-quarter of the savings in the bill.
"Some loan reforms may be necessary; however, S. 1932 cuts too deeply," Martin said. "While the lending community shares in these reductions, a very large percentage of the total cuts or increases in fees will be paid by students."
Director of Financial Aid Bruce Blackmon said students wouldn't have a problem getting a loan, but students may be in a jam when they pay the money back.
"It won't affect our ability to give out loans to students," Blackmon said. "It would be a hindrance to students because they will pay higher interest rates for loans."
"This will haunt students when they graduate," Blackmon said.
A student's estimated family contribution (EFC) determines whether he or she receives a subsidized or unsubsidized loan. Some students at UNCP have both.
UNCP currently has just fewer than 2,000 students with unsubsidized loans, Blackmon said.
U.S. News and World Report America's Best Colleges for 2006 currently ranks UNCP eighth for lowest loan debt.
According to Blackmon, the average debt for graduating seniors is currently $8,600.
"I expect that number to go up. We have many students that are borrowing to support a lifestyle rather than to pay for education," Blackmon said. "By that I mean they are borrowing to pay for a nicer apartment or a high interest credit card."
N.C. Senators Vote Yes
Both North Carolina Senators approved the bill. According to a press release on Dec. 21, 2005, Sen. Elizabeth Dole (NC-R) said unexpected expenses have caused the government to cut back.
"The majority in Congress is working hard to maintain fiscal discipline in the wake of many unforeseen challenges," Dole said in the press release. "Particularly as we approve billions of dollars in much-needed funding to rebuild areas of our country devastated by this very active hurricane season and to fight the War on Terror, we must look at ways to trim other government expenses and wisely spend the tax dollars of hardworking Americans."
Other Senators were quick to give a rebuttal.
Sen. Harry Reid (NV-D) went so far as to call the reconciliation bill un-American.
"This legislation includes the largest student aid cut in our nation's history. The costs of college have skyrocketed in recent years," Reid said Dec. 21, 2005 in his statement to the Senate.
"But instead of helping middle class families struggling with these increased burdens, this bill would increase their costs."