The House of Representatives passed a bill that will cut interest rates on student loans in half by a vote of 356-71 Wednesday, which will affect college students across the U.S., including those at AU.
Under the new bill, the College Student Relief Act of 2007 and also known as H.R. 5, the interest rate on subsidized Stafford and Perkins loans for undergraduates will drop from 6.8 percent to 3.4 percent, according to The Chronicle of Higher Education.
Stafford loans, with fixed rates and low interest, are the most popular form of federal aid, whereas Perkins Loans have a 5 percent interest rate and are awarded to undergraduate and graduate students with extreme financial aid needs, according to the Fannie Mae Web site.
The bill will now be sent to the Senate to be voted on.
According to the bill, the interest rate would gradually drop over the next five years and would not take full effect until mid-2011.
"The bill is good for the next group of students, but it would not affect us," said Jason Cunningham, a sophomore in the School of Communication.
At AU, 47 percent of undergraduates receive need-based financial aid, according to The Princeton Review Web site.
If the bill becomes law, the average undergraduate student would save $13,800 in debt, according to The Chronicle.
"I personally believe in the bill," Heather Burns, a freshman in the School of International Service, said. "It is already hard to afford a school like American."
If approved, the bill would be financed largely by lenders and loan-guarantee agencies. In addition, one-third of the money would be generated from reducing federal subsidies that the top 1 percent of private lenders received on federal loans, according to The Chronicle.
The lower loan interest rates would lessen the pressure to repay college debt immediately, Cary Goldberg, a freshman in Kogod School of Business, said.
"[Students] won't be as worried about repaying the bank because they will accrue less interest over the years," Goldberg said.
However, the length of time for the bill to take effect is disappointing, Colin Meiselman, a freshman in the School of Public Affairs, said.
"It took the Republicans to raise interest rates within two years, but the bill would not take full effect until 2011," Meiselman said. "With my current loans, I wish the interest rates would go lower faster."
If the Senate passes the bill, another obstacle still exists. On Tuesday, President Bush issued a statement opposing the bill, and could veto it, according to a press release. A two-thirds majority in both chambers would be needed in order to override a presidential veto.
