In a plan to fix the $100 billion federal budget deficit, the Bush Administration has proposed to discontinue its program that allows graduates with multiple loans to consolidate those loans under a low fixed-interest rate.
Eliminating the plan could leave future graduates paying more, but some say when there is a recession, cuts have to be made to all programs.
According to College Democrats of Wisconsin, if the plan passes, the change could cost students between $3,000 and $5,300.
“I may sound like a broken record on this one, but it needs to be said. When it comes to the well-being of students and their working families, Republicans have done all they can do to stick it to us, constantly crafting dangerous policy and stonewalling Democratic initiatives aimed at helping students,” Jason Stephany chair of College Democrats, said.
But Susie Strzelec, former chair of College Republicans, said when there is a national recession and cuts are being made to balance the budget, everyone has to scale back.
“I know that [the GOP plan] has come under a lot of heat, but the only reason they would do that is the tremendous budget shortfall,” Strzelec said. “Yes, it is detrimental to students, but when [a shortfall] occurs it is important for us to remember [that] we, as students, already get a break in our loans. If we weren’t students, we would be paying [loans] back at a much higher rate.”
Strzelec said any break in loans is good for students, but when there is a recession, everyone is affected.
“During a recession, everyone has to suffer,” she said. “We all have to make cuts.”
And U.S. Sens. Russ Feingold, D-Wisconsin, and Herb Kohl, D-Wisconsin, say the plan would unfairly harm students by increasing the cost of an education for families.
In a letter to President George Bush, the two Senators said families are already struggling to pay for college.
“We understand from news accounts that the Office of Management and Budget proposes to eliminate the federal fixed-rate student-loan consolidation program and use the savings for other purposes. Middle-class students are turning more and more to student loans as their only means of affording rising college costs,” the letter read. “Elimination of this program will deny students the ability to consolidate their loans at low, fixed interest rates — imposing tens of thousands of additional dollars in additional loan costs to students and their families.”
The federal plan was started in 1986 and allows college students who have graduated with multiple variable-rate loans to merge them into a single loan with a fixed rate. Students have 30 years to repay their loans under the current program. The interest rate on the loan is capped at 8.25 percent.
Feingold said the plan would prevent middle- and lower-class students from participating in higher education.
“As I travel to Wisconsin’s college and other campuses, one of the most important concerns from students is the increasing cost of higher education. . .” Feingold said.
