Editor’s note: This is the first installment in a three-part series on current student financial issues.
It ain’t cheap to get educated.
However, with a series of congressional measures, that may not be the case for long.
The financial obligations of students are often the topic of conversation on campus and around the nation, even though that sum often doesn’t become a reality until after graduation – about six months to be exact.
Student loans aid a majority of Baker University students to pay for what most would call a pricy undertaking, with the average final debt of Baker students nearing $19,000 in Federal Perkins and Stafford Loans.
“Over 50 percent of Baker students have some type of loan,” said Jeanne Mott, director of financial aid.
Student loans may be less burdensome, however, if a bill passed Jan. 17 by the 109th House of Representatives is ratified.
The bill, passed by a vote of 356-71, will cause the interest rate on subsidized student loans to be lowered from 6.8 percent to 3.4 percent in stages over five years to help the 5.5 million students who take out student loans nationally each year.
Mott said the House action doesn’t mean change for Baker students immediately.
“It hasn’t gone through the Senate yet, so until that happens, nothing happens,” she said. “My understanding is the version that was passed by the House will be progressive over a number of years. It will be for future loans, not previous loans.”
Mott said she has observed that student loan interest rates have minimal influence on a student’s decision to take out student loans.
“The interest rate, I don’t think, is a final determination in whether students take student loans,” Mott said. “What I have observed is as the interest rates have gone up, students have planned more carefully when taking a loan to apply to something besides direct cost.”
Senior Vanessa Wardy said the new legislation is a good step toward making college a more affordable experience.
“I think it’s awesome,” she said. “What student wouldn’t have that opinion?”
However, for junior Tim Haynes that opinion comes with a little bitterness toward the current financial expectations associated with an American college education.
“I think that the business of higher education, and I would definitely call it that, is not run ethically enough,” he said. “It is treated as a business. Students are a group that I feel very strongly should not be used to make money.”
Haynes said he feels that college students are often taken advantage of. From credit card companies to employers to university bookstores, he said college students are often preyed on for more money than the average college student can afford.
“It’s unethical that they are solely out to make a profit,” Haynes said. “Lending institutions are just one more vulture.”
Haynes said though he is encouraged by the recent legislation, he wishes the government would make greater provisions for the needs of those wishing to study at the university level.
“The only reason we need lending institutions is because we can’t afford school on our own, and we can’t afford school on our own because that’s not a service our government provides, like in some other countries,” Haynes said. “I think colleges in this country are ridiculously out of hand favoring people who have a lot of money or who are incredibly good at sports, which isn’t a lot of people.”
House Democrats have also expressed an interest in raising the non-refunded PELL grant, which goes to the highest-need students, from $4,100 to $5,100.
Though students have had position reactions to the political rhetoric concerning college loans and student provisions, Associate Professor of Political Science Bruce Anderson said students shouldn’t celebrate too soon.
“The Democrats want to do two things. They want to avoid controversy. However, there has to be the perception of things going on on the hill,” Anderson said. “Avoiding the dramatic is probably at the top of their agenda. However, they have to look like they’re running around doing things. Democrats have their eyes on the White House. They don’t want to screw that up.”
Anderson said political discussions about loans might just be banter to satisfy voters while the Democrats hope to gain a larger majority in the House and Senate and perhaps the presidency in 2008. He said the act of making college education more accessible to the public will require more than lowered interest rates. It must also involve such changes as more funding to accommodate universities and academic facilities.
“I think the federal interest rate on student loans is a front-end problem,” Anderson said. “If it does what they say it’s going to do – that is make college more accessible – where are the students going to go? It doesn’t address the larger problem.”
Anderson said the most recent change may be banter but may have potential.
“Making college more accessible as a phrase is an easy sale,” he said. “It’s almost impossible to get a job that pays more than minimum wage without a B.A.”
The recent legislation comes along with a series of prior changes to student loan regulations. On July 1, 2006, Congress passed two pieces of legislation that have affected how student loans are handled.
The first was legislation that would make student loans awarded at a fixed rate. Mott said this means the interest rate increases, which are usually set for July 1 of each year, applied only to new loans and loans that were granted prior to the new rule.
Another piece of legislation has increased the use of the word “consolidation” in discussions of student loans.
“That’s why you’re getting all this literature. It was called the ‘single-service rule,’ and Congress did away with it July 1, 2006,” Mott said.
After the single-service rule was eliminated, loans were allowed to be transferred between financial institutions. Before, a lendee had to pay the bank or credit union from which the loan was gained.
Mott said consolidation ultimately can help students save while paying off student loans, but she said students must be wary when searching for a company to accommodate the consolidation.
“Students need to time that carefully. There’s a lot of pressure to consolidate before July 1, but if you do that, you lose the rest of your grace period,” Mott said. “If students don’t research carefully, they can be consolidating with an agency that isn’t as service oriented.”I have observed is as the interest rates have gone up, students have planned more carefully when taking a loan to apply to something besides direct cost.”
Senior Vanessa Wardy said the new legislation is a good step toward making college a more affordable experience.
“I think it’s awesome,” she said. “What student wouldn’t have that opinion?”
However, for junior Tim Haynes that opinion comes with a little bitterness toward the current financial expectations associated with an American college education.
“I think that the business of higher education, and I would definitely call it that, is not run ethically enough,” he said. “It is treated as a business. Students are a group that I feel very strongly should not be used to make money.”
Haynes said though he is encouraged by the recent legislation, he wishes the government would make greater provisions for the needs of those wishing to attain a degree.
“The only reason we need lending institutions is because we can’t afford school on our own, and we can’t afford school on our own because that’s not a service our government provides, like in some other countries,” Haynes said. “I think colleges in this country are ridiculously out of hand favoring people who have a lot of money or who are incredibly good at sports, which isn’t a lot of people.”
House Democrats have also discussed raising the non-refunded PELL grant, which goes to the highest-need students, from $4,050 to $5,100.
Though students have had positive reactions to the political rhetoric concerning college loans and student provisions, Associate Professor of Political Science Bruce Anderson said they shouldn’t rejoice too soon.
“The Democrats want to do two things. They want to avoid controversy. However, there has to be the perception of things going on on the hill,” Anderson said. “Avoiding the dramatic is probably at the top of their agenda. However, they have to look like they’re running around doing things. Democrats have their eyes on the White House. They don’t want to screw that up.”
Anderson said political discussions about loans might just be banter to satisfy voters while the Democrats hope to gain a larger majority in the House and Senate and perhaps the presidency in 2008.
“I think the federal interest rate on student loans is a front-end problem,” he said. “If it does what they say it’s going to do – that is make college more accessible – where are the students going to go? It doesn’t address the larger problem.”
The recent legislation comes along with a series of prior changes to student loan regulations. On July 1, 2006, Congress passed two pieces of legislation that have affected how student loans are handled.
The first was legislation that would give student loans a fixed rate. Mott said this means the interest rate increases, which are usually set for July 1 of each year, applied only to new loans and loans that were granted prior to the new rule.
Another piece of legislation has increased the use of the word “consolidation” in discussions of student loans.
“That’s why you’re getting all this literature. It was called the ‘single-service rule,’ and Congress did away with it July 1, 2006,” Mott said.
After the single-service rule was eliminated, loans were allowed to be transferred between financial institutions.
Mott said consolidation ultimately can help students save while paying off loans.
“Students need to time that carefully. There’s a lot of pressure to consolidate before July 1, but if you do that, you lose the rest of your grace period,” Mott said. “If students don’t research carefully, they can be consolidating with an agency that isn’t as service oriented.”