Rising student loan interest rates, lack of financial aid pose obstacles for education
From the current debate between the White House and the House of Representatives regarding student loan interest rates to a current California proposal that would make college more affordable for those coming from middle class families, students are now situated at a crucial intersection of education and politics.
Students who have taken out unsubsidized loans faced the possibility of doubled interest rates to pay back after graduating, which were set to increase from 3.4 percent to 6.8 percent July 1.
While both Republicans and Democrats agree that the current interest rates should be extended through the summer, the former group proposes to cut funds from the 2010 Prevention and Public Health Fund. This proposal was outlined in the Interest Rate Reduction Act, HR 4628, released by the U.S. House of Representatives April 27.
According to a White House press release, however, President Obama will be advised to veto the bill in order to avoid cutting funds from public health.
Whether the interest rate extension is maintained throughout the next four years will have a significant effect on Antaisha McClary, a freshman at SF State. While she has received educational funding from the G.I. Bill, she still needed to apply for an unsubsidized loan of approximately $3,200 to cover the remaining cost of her fees this year.
“It shouldn’t affect us too much, but it’s still going to put a damper,” said the Japanese major. “My family just moved to California and bought a house; we’re still trying to get situated financially.”
The 18 year old added that she may need to get a job now to start saving money to pay back the interest rate.
According to SF State Student Financial Aid Director Barbara Hubler, the increases of educational fees and the amounts of available financial aid have been disproportional. In the 10 years that she has been in the position, she has noticed that even as tuition rises, students have not been offered more aid.
“For example, the maximum Federal Pell Grant and federal student loan awards have not increased in the last few years,” she said.
Hubler added that more students have been applying for financial aid in the past decade, and that those who graduated from the University last June had acquired an average of $18,800 in loan debt.
One California assemblyman is currently working to reduce that amount by making college more affordable for students whose families earn enough money to make them unqualified for grants, but who are not financially equipped to single-handedly fund four years of post-secondary education.
Speaker of the California Assembly John Perez recently introduced the Middle Class Scholarship Act, which would reduce tuition by more than 60 percent for students in the state who are not approved for Cal Grants, but whose families’ annual income is less than $150,000.
According to Speaker Press Secretary John Vigna, the proposal was a result of legislators’ dedication to preserving the funds given to students to pursue college at public universities in California.
“UC and CSU fees have more than doubled; community colleges have nearly tripled,” he said. “The net effect of this is that middle class families are having difficulty in affording college.”
According to Vigna, the Middle Class Scholarship Act would be funded by allowing larger corporations operating in multiple states to select the cheaper of two formulas in calculating taxes.
“We feel that’s an unjustifiable tax loophole,” he said.