http://www.dailytexanonline.com/media/pape...texanonline.com
QUOTE
The U.S. Congress is poised to pass the most significant cut to student loans in the federal aid program's history - a move that would result in higher interest rates for students.
As one of its last acts of 2005, Congress slashed $12.7 billion from government-backed student loan programs, accounting for one-third of the $40 billion deficit-reduction package that lawmakers approved before heading home for the holidays. The final version of the bill, scheduled to be voted on next month, includes higher interest rates for students and parents and would not allow students to consolidate their loans to get lower interest rates after July 1.
The cuts will have a "delayed impact" on the 24,000 students at UT who depend on federal aid, said Larry Burt, an associate vice president of Student Financial Services.
"The cost to students will really be in the interest rate increase, which they won't feel until they leave the University and have to begin paying off their loans," Burt said.
According to Burt, the current rate students pay on their government-backed loans is 4.7 percent. With the new bill, that rate would jump to a fixed rate of 6.8 percent. Interest rates on federally backed loans for parents would also jump from 6.1 percent to 8.5 percent.
"It concerns me," said Emily Grost, a nursing senior. "I mean, I'm going to be graduating $50,000 in debt. And then I'm going to go to grad school. I'm ready to pay it, but it's hard having all that money hovering over your head."
Congress initially planned to set aside $8.25 billion for Pell Grants, but it reduced that amount to $3.75 billion in the latest version of the bill.
The selection criteria for Pell Grants would also become more academically competitive and less need-based. The proposed plan provides grants of $750 and $1,300 for freshmen and sophomores, respectively, who maintain 3.0 grade point averages and have high school course loads deemed "rigorous" by the U.S. education secretary.
Additionally, there will be $4,000 grants available for juniors and seniors who major in mathematics, sciences, technology or certain foreign languages deemed critical to national security. Senate Majority Leader Bill Frist, R-Tenn., pitched the grants as a way to up America's competitiveness in the global economy, nicknaming them "Smart Grants," an acronym for "science and mathematics access to retain talent."
But Sen. Edward M. Kennedy, D-Mass., expressed concern that the "Smart Grants" abandon traditional principles of giving the most help to the neediest students.
"We should provide incentives for students to study math and science, but at the same time give every American the chance to attend college," Kennedy said, according to The Chronicle of Higher Education.
Since the cuts and changes were proposed, there have been many doomsday-style articles advising students to rush to consolidate their loans before the July 1 deadline is set to hit, but Burt advises students to consider their individual situations and not react impulsively.
"You have to be thoughtful and do your research before any kind of consolidation," he said.
The Chronicle of Higher Education contributed to this report.
As one of its last acts of 2005, Congress slashed $12.7 billion from government-backed student loan programs, accounting for one-third of the $40 billion deficit-reduction package that lawmakers approved before heading home for the holidays. The final version of the bill, scheduled to be voted on next month, includes higher interest rates for students and parents and would not allow students to consolidate their loans to get lower interest rates after July 1.
The cuts will have a "delayed impact" on the 24,000 students at UT who depend on federal aid, said Larry Burt, an associate vice president of Student Financial Services.
"The cost to students will really be in the interest rate increase, which they won't feel until they leave the University and have to begin paying off their loans," Burt said.
According to Burt, the current rate students pay on their government-backed loans is 4.7 percent. With the new bill, that rate would jump to a fixed rate of 6.8 percent. Interest rates on federally backed loans for parents would also jump from 6.1 percent to 8.5 percent.
"It concerns me," said Emily Grost, a nursing senior. "I mean, I'm going to be graduating $50,000 in debt. And then I'm going to go to grad school. I'm ready to pay it, but it's hard having all that money hovering over your head."
Congress initially planned to set aside $8.25 billion for Pell Grants, but it reduced that amount to $3.75 billion in the latest version of the bill.
The selection criteria for Pell Grants would also become more academically competitive and less need-based. The proposed plan provides grants of $750 and $1,300 for freshmen and sophomores, respectively, who maintain 3.0 grade point averages and have high school course loads deemed "rigorous" by the U.S. education secretary.
Additionally, there will be $4,000 grants available for juniors and seniors who major in mathematics, sciences, technology or certain foreign languages deemed critical to national security. Senate Majority Leader Bill Frist, R-Tenn., pitched the grants as a way to up America's competitiveness in the global economy, nicknaming them "Smart Grants," an acronym for "science and mathematics access to retain talent."
But Sen. Edward M. Kennedy, D-Mass., expressed concern that the "Smart Grants" abandon traditional principles of giving the most help to the neediest students.
"We should provide incentives for students to study math and science, but at the same time give every American the chance to attend college," Kennedy said, according to The Chronicle of Higher Education.
Since the cuts and changes were proposed, there have been many doomsday-style articles advising students to rush to consolidate their loans before the July 1 deadline is set to hit, but Burt advises students to consider their individual situations and not react impulsively.
"You have to be thoughtful and do your research before any kind of consolidation," he said.
The Chronicle of Higher Education contributed to this report.