U.S. Rep. Adam Smith (D-WA) today voted to make college more affordable by halving the interest rate on subsidized student loans for undergraduates over the next five years. When fully phased in, the bill cuts the interest rate from 6.8% to 3.4%. The measure cuts the interest rate in half in five steps: from 6.8% to 6.12% in 2007; 5.44% in 2008; 4.76% in 2009; 4.08% in 2010; and 3.4% in 2011.
The House passed the bill this afternoon by a vote of 356 to 71.
“In Washington State, there are 47,631 four-year college students with subsidized student loans who all would benefit from this bill. Once fully phased in, the bill would provide $4,671 in savings to our state’s average four-year college student starting school in 2011 with subsidized student loans over the life of their loans,” Smith said.
“Puget Sound’s economy depends on having a highly-skilled and well-educated workforce. Making college more affordable is key to our remaining strong in the face of an increasingly competitive global economy. We must do everything possible to address rising costs so that no qualified student is prevented from going to college because of the price,” Smith added.
“Cutting interest rates on student loans is only the first step Democrats will take to make college more affordable. Later this year, House Democrats will also introduce legislation aimed at increasing the maximum Pell Grant scholarship and take other important steps to reduce the financial barriers to a college education,” Smith said.
The bill is fully paid for by making modest reductions in certain lender and guaranty agency subsidies in order to make the student loan program more efficient and effective for students and for American taxpayers.
This bill is supported by dozens of organizations, including the American Council on Education, National Association of Independent Colleges and Universities, American Association for State Colleges and Universities, American Association of Community Colleges, Alliance for Equity in Higher Education, Hispanic Association of Colleges and Universities, College Board, College Parents of America, and the Institute for Higher Education Policy.