Speaker Nancy Pelosi and the newly elected Democratic House have been pushing for many new initiatives. Along with approving legislation on stem cell research, raising the minimum wage to $7.25 an hour, and lowering pharmaceutical prices, cutting the student loan interest rate in half has been a major goal in Pelosi’s “100 Hour Plan.”
On January 17, the house approved the student loan bill, with a vote of 356 to 71. This initiative reduces student loan interest rates from 6.8% to 3.4%. The U.S. Public Interest Research Group has reported that this will enable students to save as much as $2,300 in interest in the span of a 15-year loan.
So what does this mean for high school students?
For many students, the fear of a huge, unavoidable college-loan debt is ever looming.
The average federal student loan debt, which is $19,202, can encumber someone for decades. This program has attempted to reduce such hindrances.
But don’t plan on this bill relieving you of much anxiety. For one, this interest rate cut is a five-year plan, meaning that rates won’t be down to 3.4% until the year 2011. They will decrease steadily each year from now until then.
Also, once the rates finally reach that low percentage, the House will vote on it again, potentially discontinuing the reduction, and returning the rate to its original price.
Skeptical Republicans also note that in 2011, when the bill is in full effect, the average student will only save a maximum of $7 a month. They feel the initiative is wasting millions of government dollars, and not greatly improving the problem of high student debt. But at this point, students can use any help available.
