REDUCING STUDENT LOAN INTEREST RATES — Working with our leaders in Washington, D.C., WISPIRG and our allies were able to reverse the cuts to student aid.

House Votes To Increase Student Aid

In January 2006 the federal government’s role in helping more Americans afford a college education took a big hit.

In order to finance tax cuts that largely benefited the wealthiest Americans, Congress cut $12 billion from federal student loan programs.

Fast-forward to January 2007.

In a bipartisan vote, the U.S. House voted to lower interest rates on student loans for low- and middle-income families by cutting billions of dollars in subsidies to private banks.

The dramatic turnaround was due to many factors, not the least of which was the shift in power from a Republican-led Congress intent on tax cuts to a Democrat-controlled Congress more interested in restoring money to federal programs.

The change, however, also occurred in response to a campaign, led by our staff and fueled by the support of our members.

In July 2006, our Higher Education Advocate Luke Swarthout and other staff released city-by-city reports, detailing how student loan borrowing has increased, on average, three times faster than consumer spending.

In another study, we documented how the growing debt carried by many students can diminish their career opportunities and have a lasting impact on important life decisions. For example, we found that 23 percent of four-year public university graduates can’t afford to live on a teacher’s salary, due to their debt.

Thanks to our research making headlines across the country, from The New York Times to the LA Times, Chicago Tribune and USA Today (to name a few), we were able to kick our organizing into high gear.

We helped organize a coalition of our allies and mobilized students and faculty on college campuses—including the 100 campuses with PIRG chapters—to e-mail or call their members of Congress.

By the time Speaker Pelosi put together her “100 hours” agenda for the beginning of the 110th Congress, we had made a strong case for reversing the cuts in student aid to make the high-priority list.

In early January, the new House leadership proposed lowering interest rates on subsidized Stafford student loans from 6.8 percent to 3.4 percent over the next five years.

More than 5 million students receive subsidized Stafford loans every year, and the interest rate reduction would save millions of borrowers thousands of dollars over the life of their student loans.

Shortly after the plan was announced, we released a report analyzing its impact. The report and its analysis were widely quoted in the media and referred to by legislators.

Chairman of the Education and Labor Committee George Miller circulated a letter to all members of Congress encouraging them to read the report before they voted on the issue.

On January 17, riding a wave of national attention and public concern, the House bill to lower interest rates, H.R. 5, passed overwhelmingly, 356 to 71.

In his floor statement, Chairman Miller addressed the support of U.S. PIRG, the Federation of State PIRGs, for the legislation.

“There has been a lot of discussion today about who doesn’t like this bill. Maybe some of the lenders don’t like this bill, some of the pundits don’t like this bill . . . The people who like this bill, and the people who matter, are the students.

“And that is why U.S. PIRG and the U.S. Student Association and so many students support this legislation, because they know what this means to them . . . They know this will lower the cost of college.”

WISPIRG is working with the Senate leadership to pass comprehensive debt reduction measures, and make sure that this rate reduction becomes law.