On June 29, both houses of Congress passed a bill to extend federal transportation funding and to continue student loan interest rates at the current level of 3.4 percent, but most media reporting all but ignored the student loan story, and outlets that did cover it did not inform the public about a disturbing downside of the bill.
A notable exception was NPR, which on Saturday brought home the truth of the matter. The report by Claudio Sanchez led with these words: “The House passed a bill Friday to keep the interest rate on government-backed student loans from doubling. It’s a victory for students, but other compromises by Congress could cost them a lot more in the long run.”
This is what is known in the trade as a great lead to a story.
That aside, the facts of the story reveal that to continue the student loan rate at the current level of 3.4 percent, Congress in fact cut or restricted student financial aid in other areas–to the tune of $4.6 billion. In return, the average student borrower will save about $1,000 a year versus what they would have paid if Congress had enacted the 6.8 percent interest rate.
“The total cost to students, according to some estimates, is $18-20 billion extra over the next 10 years,” according to NPR.
Students will now lose the six-month grace period after graduation and be required to begin loan payments immediately after graduation. Graduate students will have to begin paying the interest on their loans while they are still in school.
According to Joel Packer, executive director of the Committee for Education Funding, the bill now has limits on the number of semesters during which needy students can receive Pell grants and makes it more difficult to receive the maximum amount.
Getachew Kassa, legislative director of the U.S. Student Association, told NPR that “in the past year, we’ve had deals where students have basically been robbed. I think the real question to ask is, at what point is this going to stop? Because sooner or later, you take a little bit here, a little bit there — you have nothing else to take away from.”