House Votes To Cut Loans

The House of Representatives passed legislation last week that would cut interest rates on need-based student loans in half over the next five years.

The College Student Relief Act of 2007, which would lower the interest rate from 6.8 percent to 3.4 percent, was among the top legislative priorities for the new Democrats-led Congress in its first 100 legislative hours.

The bill must still be approved by the Senate and signed by the president before it can become law.

Though the legislation promises to have a wide impact nationally, it will affect Harvard students far less than it will the average college student.

Compared to national averages, Harvard students accumulate only about half of the national median student debt, said Sally C. Donahue, Harvard’s director of financial aid.

And the median debt has declined over the past decade as more students have been funded by larger scholarships from the University.

“Fortunately Harvard students have been borrowing less and less for the past decade due to increasing scholarships,” said Donahue.

The current interest rate on student loans was raised to 6.8 percent by Congress’s Deficit Reduction Act of 2005. That measure passed in the Republican-controlled House by a margin of 216 to 214 in a narrow partisan vote last February.

This year’s initiative to cut the current rate was overwhelmingly supported by the House by a 356 to 71 margin.

Suzanne Day, who handles Harvard’s federal relations in Washington, said that the Bush administration will likely oppose the bill.

“It is hard to guess [if the bill will become law] because the Congress is so new, and getting legislation passed and signed is daunting,” Day said. “I would be surprised to see anything done in the first half of this year.”

The legislation was introduced in the House by Rep. George Miller (D-Calif.), and would cost an estimated $6 billion, Day said.

—Staff writer Daniela Nemerenco can be reached at dnemeren@fas.harvard.edu.