Congress OKs lower rate on student loans
Congress sent President Bush legislation Friday to boost financial aid for college students, paying for it by cutting $20 billion in government...
The Associated Press
WASHINGTON -- Congress sent President Bush legislation Friday to boost financial aid for college students, paying for it by cutting $20 billion in government subsidies to banks that make student loans.
Bush has indicated he will sign the legislation, although his administration has criticized a student-loan interest-rate cut and a new loan-forgiveness program, among other things.
House Democrats had made the popular interest-rate cut a priority during the approach to the last election, in which they regained control of Congress.
The House voted 292-97 for the student-aid bill Friday. Earlier in the day, the Senate approved the measure 79-12. All the lawmakers who voted against the bill were Republicans.
Washington state's senators, Maria Cantwell and Patty Murray, both Democrats, voted for the legislation. In the House, Democrats Brian Baird, Jay Inslee, Rick Larsen and Adam Smith voted for the legislation, while Republicans Doc Hastings and Cathy McMorris Rodgers voted against. Democratic Reps. Norm Dicks and Jim McDermott and Republican Rep. Dave Reichert didn't vote.
The boost in financial aid to college students was among the domestic priorities Democrats set when they took control of Congress this year. Two others -- an increase in the minimum wage and mandatory air and sea-cargo inspections -- have become law, and a third, ethics overhaul, is awaiting Bush's signature.
The financial-aid bill would increase the maximum Pell Grant, which goes to the poorest college students, from $4,310 a year to $5,400 a year by 2012.
It would cut interest rates on federally backed student loans to poor and middle-class students from 6.8 percent to 3.4 percent over the next four years.
California Rep. Buck McKeon, the leading Republican on the House education committee, criticized the rate cut. He said students will go back to paying the higher rate in four years or taxpayers will have to foot the bill for the cut to continue.
"What once was a campaign promise has become a trap that will ensnare either students or taxpayers," McKeon said.
Democratic lawmakers said the $20 billion in cuts to banks are aimed at excessive government subsidies to lenders. The subsidies were established to ensure that banks enter and stay in the college-loan business.
The bill also sets up a loan-forgiveness program for college graduates who work for 10 years in public-service professions, such as teaching or nursing.
It would cap annual payments for students at a percentage of their income, which lawmakers say would prevent people from having to pay back more than they can afford.
The legislation is scheduled to become effective Oct. 1.
Copyright © 2007 The Seattle Times Company
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