Iowa’s two freshmen congressmen are praising a bill passed today that cuts in half the interest rates on student loans from the government. If the bill becomes law, government student loan interest rates would fall to three-point-four percent for the next five years.
Congressman Dave Loebsack, a Democrat from Mount Vernon, says raising the maximum Pell Grant to $5,200 is part of the bill, too. "As a result of this legislation, Iowa students and families will receive $232 million over five years in additional benefits in the form of student loans and Pell Grants," Loebsack says. "Almost 77,000 students will benefit from the eligibility expansion and Pell Grant increase in this bill."
An amendment Loebsack offered to make part-time students eligible for Pell Grants is part of the package. "As a long time teacher at Cornell College in Iowa, I regularly encountered students struggling to afford their education," Loebsack says. "I am certain this bill makes the right investments at a critical time for our students."
Congressman Bruce Braley, a Democrat from Waterloo, says the bill would have an historic impact on education. Braley says this would be the largest single investment in college financial aid since the G-I bill was passed in 1944, and "at no new cost to taxpayers." It will provide a financial boost to students of 18-billion dollars over the next five years.
Braley says the cut in interest rates is another benefit to Iowa students. He says the interest rate savings for an Iowa student over the life of a loan at a four-year school, amounts to $4,460. Braley says the bill would serve as a sort of leverage for more money to pay for college.
"Because it will allow a lot of private foundations who currently are starting loan incentive programs and scholarship programs, such as the Gates Foundation, to increase that overal impact by matching or in some cases doubling the amount of these federal Pell Grants," Braley says.
The bill passed the House today on a 273-149 vote. President Bush has threatened to veto the bill. Republicans say it favors government over markets because it will prompt more students to take out government loans rather than getting a loan from a non-profit or commercial lender. The federal government handles about 20 percent of student loans today and Republicans warn the government will be overwhelmed by student loan applications.