The same day the U.S. House of Representatives sent a bill on student loan rates to the White House for President Obama’s signature, a group of HBCU presidents sent a letter to the White House requesting a meeting with the president to “collaboratively explore viable alternatives to [the policy which further restricted Parent plus Loan eligibility] and examine less punitive student loan underwriting standards.”
The letter — which was signed by the presidents of Clark Atlanta, Alcorn State, Bowie State, North Carolina A&T, Southern, Coppin State, Howard, Tuskegee, Kentucky State, Morgan State and Delaware State universities — decries the “harmful effects this policy change has had on access to college nationally, its disproportionate impact on the HBCU community over the past year and its devastating impact on student enrollment in the coming year, and beyond.”
The presidents called the policy “an abuse of the Department’s discretion and represents a failure on the part of the Department to negotiate in good faith with the higher education community — and with the HBCU community in particular.”
The Senate-approved Bipartisan Student Loan Certainty Act, which would immediately reduce interest rates on student loans taken out for the upcoming semester, passed the House easily yesterday. It ties student loan rates to the success of the economy, a policy the White House has previously endorsed.
Instead of student loan rates being set by Congress, under the new measure, rates would be determined by the financial markets. Loan rates would be fixed for the signed year, but may vary from year to year thereafter, depending on the ebbs and flows of the economy. This fall, undergraduate students would face 3.9 percent interest rates on subsidized and unsubsidized loans, graduate students would pay 4.9 percent and parents loans would be offered at 6.4 percent. It caps interest rates at 8.25 percent for undergraduates, 9.5 percent for graduate students and 10.5 for parents.
Some are concerned that this bill is a short-term fix that may cost students more in the long-run.
“The bottom line is that students will pay more under this bill than if Congress did nothing, and low rates will soon give way to rates that are even higher than the 6.8 percent rate that Congress is trying to avoid,” Chris Lindstrom, higher education program director for the consumer group US PIRG, told The Huffington Post.