NAACP-SUPPORTED LEGISLATION TO CUT FEDERAL NEED-BASED STUDENT INTEREST LOAN PAYMENTS PASSES US HOUSE OF REPRESENTATIVES
On Wednesday, January 17 2007, the US House of Representatives passed, by an overwhelming bi-partisan margin of 356 yeas to 71 nays, H.R. 5, the College Student Relief Act of 2007.
Specifically, the legislation would cut interest rates on need-based federal loans for undergraduate students from its current rate of 6.8% to 3.4% by the year 2011. Once fully phased in, these cuts would save a typical borrower, with $13,800 in need-based federal student loan debt, $4,400 in savings over the life of the loan.
Federal financial student aid is perhaps more important now than ever before. In 1997, college graduates earned 1.7 times more than Americans with a high school diploma. Over a lifetime, an individual with a college degree will earn more than $1 million more than someone without their postsecondary degree. Unfortunately, as the need for a college education has grown so has the cost. For years, college costs have risen at rates higher than inflation. Over the last 30 years, tuition at public 4-year colleges has increased by about 50%, and tuition at private 4-year colleges has increased by a whopping 110%. Given the growing cost of college, and its increased importance, most (62%) full time postsecondary students received and relied on some sort of financial aid. This is especially true of racial and ethnic minority students: 74% of African American college students, 69% of Hispanic college students and 60% of white college students were dependent on financial aid.
The typical student now graduates from college with $17,500 in total federal student loan debt. According to the US Department of Education, as many as 200,000 potential college students are forced to delay or forgo attending college due to the cost. It is estimated that half of the student-loan borrowers who would benefit from H.R. 5, The College Student Relief Act of 2007, have annual family incomes of between $26,000 and $68,000.
The legislation now moves to the US Senate, and then to the President for his signature. In addition to supporting H.R. 5, the NAACP also supports efforts to reduce students' financial burdens through increasing Pell Grants and other forms of financial assistance.