Students could receive loan forgiveness
Friday, October 5, 2007
By Ryan Holly
College Cost Reduction and Access Act of 2007 is an ambitious bill
Congress advocates to help students receive loans for college.
“Our bill restores the balance to this grossly unfair student loan
system by directing funds to the students, not to the banks,” Senator
and Chairman of the Education Committee Edward M. Kennedy (D-Mass.)
Pell Grants are awarded based on information given on a Free
Application for Federal Student Aid (FAFSA) form. Congress projects the
current maximum Pell Grant of $4,310 to go up to $5,400 by 2012,
resulting in the largest injection of money into the Pell Grant program
“About 25 percent of Oklahoma Christian students receive Pell Grants,
and these students will be impacted the most immediately,” Director for
Financial Services Clint LaRue said.
Students receiving Stafford loans will be significantly impacted by the
bill’s progression. Speaker of the House Nancy Pelosi (D-Calif.)
included the reduction of student loan interest rates in her “Six for
‘06” campaign goals. This goal is evident in the bill’s purpose to
lower the student loan interest rate from 6.8 percent to 3.4 percent
over five years.
“As far as the interest rate reductions, the current interest rate for
Stafford loans is 6.8 percent. If you take out a Stafford loan next
year, the rate will be six percent so the next group of students that
will be impacted by this bill are those who take out Stafford loans
because their rates will be lower than they have been for the last
couple of years,” LaRue said.
Loan forgiveness is an innovative initiative branching from the
signing of the bill. This forgiveness will be available to all students
who plan to enter fields of public service after graduating. Students
who aspire to be teachers, police officers, firefighters or other
public servants will be forgiven of their debt after they work in their
desired field for 10 years. Payments on federally backed loans will be
limited to 15 percent of the borrower’s estimated income before taxes
during these 10 years of service.
“I definitely agree with the loan forgiveness idea. Part of this stems
from the fact that I’m an English Education major and I plan on
teaching at some point in the future,” senior Stephen Lupplace said. “I
think that teachers, cops and others who are willing to serve society
should be rewarded for their contributions.”
Student loan companies will suffer from the backlash of this bill.
Congress is cutting $21 billion in subsidies to student loan companies
so more students will rely on direct loans from the government.
“This subsidy cut will result in fewer student loan companies. The
government is trying to weed out the private lenders, and that is very
controversial,” LaRue said.
Many are fearful about how this subsidy cut will negatively impact the private sector loan program.
“[Subsidy cuts] will cripple the private sector loan program,”
Representative and former Chairman of the Education Committee John
Boehner (R-Ohio) said.
The student loan business is an $85 billion industry.
“There are so many businesses in the states that make such a large
profit that they have plenty of extra money. Instead of expanding their
wealth even more, they should be donating to a better cause,” junior
Natalie Cammarata said. “I think that if these businesses have the
resources then they should be using them to better educate the American
population. If taking from bigger businesses to give to student loans
is the way to achieve that goal of educating the population, then I
completely agree with the idea.”
Congress signed this bill on Sept. 7, and it has continued to gain
support. Momentum has increased since President Bush signed it into law
on Sept. 27. This bill also enables students to capitalize on a new
grant awarding $4,000 per year of college to students choosing to enter
an eligible high-need field.
“There is a $4,000 new grant for students who agree to teach math,
science, foreign language, special education or some other eligible
high-need field. If the student is willing to go into one of those
areas, they will receive this grant while they are in school,” LaRue
said. “If they get out of school and do not fulfill their obligation to
teach like they agreed to do then those grants turn into loans.”