House cuts $14 billion in student aid
If the United States Senate confirms $50 billion in spending cuts, students can expect to pay an average of $5800 more for their college loans. In addition to $14.3 billion in cuts to federal financial aid for college students, the bill includes significant cuts from other federal programs, including Medicaid and food stamps.
The bill, H.R. 4241, was passed by the House of Representatives on November 18.
The New York Times reported that the bill, which included the largest cut to student loan programs in the history of the United States, was passed in the House by a slim margin with a vote of 217– 215, following a floor debate lasting until Friday’s early morning hours.
The Senate and the House must reconcile two vastly different plans before the cuts can take effect.
Mike Doyle (D–Pa.), representative for Pennsylvania’s 14th congressional district and a vehement opponent of the House bill, said, “At least the Senate version helps more people in the middle class, while the House version is geared towards funding their tax cuts.” Doyle was referring to a Republican initiative to make $70 billion in tax cuts, which are focused on the upper-class, this month.
“The House bill is a little harsher, maybe.… It’s just the fiscal reality. Is it doom and gloom? I don’t think so,” said Linda Anderson, Carnegie Mellon’s director of Student Financial Assistance and Services. “I think we’ve been in some false fiscal reality, and all schools are just feeling the impact of health insurance and technology costs.”
Anderson highlighted some of the most significant changes found in H.R. 4241, which will have a direct impact on how much student borrowers pay out of pocket for college loans: It will increase the cap on student loan interest rates from 6.8 percent to 8.25 percent; parent loans will see an interest rate cap of 9 percent, up from 7.9 percent; taxes on student loans and interest rates on consolidation loans will increase; it will reduce subsidies to student lenders by $20.5 billion over a 10-year period; and it will close a loophole allowing students to consolidate loans while still enrolled.
According to The Daily Vanguard, Portland (Oregon) State University’s newspaper, Rep. John Boehner (R–Ohio) stated in a press release, “This bill demonstrates our resolve to restore fiscal responsibility and reduce the federal deficit on behalf of our children and grandchildren.”
House Democrats did not share this opinion, though, and unanimously voted against the bill. The Daily Vanguard also reported that Rep. Chet Edwards (D–Texas), echoing the sentiments of his caucus, referred to the tax cuts as an “assault on the dreams of middle- and low-income American families.”
Doyle told The Tartan that the Republican strategy has been to “break the linkage for the public” between the budget cuts and future plans for tax cuts. “They wouldn’t be able to fund the tax cut if they didn’t have this budget cut. Any bill that has tax cuts, I’m not voting for.”
Anderson, who has been monitoring the situation for Carnegie Mellon, said that the school is not directly involved in the debate, but it is supporting the actions of its member organizations, such as the National Association of Student Financial Aid Administrators (NASFAA).
“We have limited but adequate resources; it will not be enough to adversely impact CMU,” said Anderson. “This will not affect tuition, it isn’t even a data point with how we set tuition.” Anderson said that the final House- and Senate-approved version will be conservative out of necessity.
Doyle said, “I think we’ve put enough pressure on moderate and marginal Republicans that we hopefully will get the report to look a lot closer to the Senate version.”
It appears that students are also taking an active role in putting pressure on their representatives. The Chronicle of Higher Education reported on October 19 that 60 campuses across the country had already begun calling congressmen to protest the changes.