The Bush administration withdrew its proposal to make up for shortages in the federal budget by cutting Pell Grant student aid and making it harder for students to borrow money at a fixed interest rate.
The plan, which came under harsh criticism for these conditions, was attached to a $27 billion anti-terrorism and defense package requested by President Bush.
Although many Republicans backed the plan, some state lawmakers and student groups came together, calling the proposal unfair to students and vowing to fight the plan’s passage. But some say the plan wouldn’t have a dramatic effect on students.
Jason Stephany, chair of the College Democrats of Wisconsin, said the plan would prevent college graduates from consolidating their federal loans under a low, fixed interest rate.
Stephany said the plan would have cost college students between $3,000 to $5,300.
“If a student isn’t safe in his or her own state, how can they be considered safe in their own country?” Stephany asked. “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 to stick it to us, constantly crafting dangerous policy and stonewalling Democratic initiatives aimed at helping students.”
But Donald Downs, UW-Madison political-science professor, said it was possible the plan would have hurt students, based on the status of the economy.
“It would have made student loans more risky,” Downs said. “But it would also depend on how the interest rate is going. And if the interest rate is high, it is likely that the job market is going to be tight.”
Downs said the proposal was likely proposed as a way for the government and banks to minimize their risk.
“Honestly, I don’t think it [was] going to hurt students as much as the current interest rate,” he said. “If the president wants to make cuts across the board, everybody is going to have to give a little bit.”
He suggested it might even be beneficial to students.
“If the variable interest rate is lower than the fixed rate, it could save students,” Downs said.
Currently, students can consolidate multiple loans and lock in the interest rates. The Bush plan would have allowed the loans to float over time. Currently, interest rates are low and are likely to increase, saving the government money.
At a Democratic rally Wednesday, U.S. Rep. Tammy Baldwin, D-Madison, called the plan “outrageous.”
Baldwin estimated a student with $20,000 in loans would have ended up paying $5,000 more.
U.S. Sen. Russ Feingold, D-Wis., agreed the proposal had the potential to shut out middle- and lower-income students.
Feingold and Baldwin said they would like to see an increase in the size of Pell Grants from $4,000 to $4,500 per student. They said in Wisconsin, where the budget deficit is likely to mean a tuition hike, it is particularly important to raise the size of Pell Grants.
The U.S. House voted against Baldwin’s proposal, but student lobby groups hope it will be increased under the U.S. Senate’s budget plan.
