Musgrave votes 'no' on interest-rate bill

The legislation, which received broad bipartisan support, would save the average college borrower about $4,500.

By: Vimal Patel

Posted: 1/19/07

Future CSU students are a step closer to saving thousands of dollars on student loans after the House voted Wednesday night to cut interest rates for borrowers.

The College Student Relief Act of 2007, now headed for the Senate, was approved 356-71, snagging about 64 percent of the Republicans who voted for it as well.

The bill would gut interest rates on federally subsidized student loans in half, from the current 6.8 percent rate to 3.4 percent, saving the average college borrower about $4,500 over the life of their loans.

About 5.5 million college borrowers have federally subsidized student loans.

Rep. Marilyn Musgrave, who represents the district, voted against the bill. The conservative congresswoman said slashing interest rates on student loans does nothing to make college more affordable or accessible, since students don't have to worry about interest rates until after college.

"That was a tough vote for Republicans," said John Straayer, a CSU political science professor.

"Nobody wants to cast a vote that's going to be interpreted as rejecting the opportunity to provide debt relief for students. Most Republicans would have liked to vote against it, but many in competitive districts felt compelled to support it."

The new Democrat-controlled Congress charged into power in last November's elections and pushed an ambitious agenda that included making higher education more affordable and accessible.

The Wednesday victory suggests Republicans are hobbled by the stinging midterm-election defeat and more willing to bend to Democratic legislation after controlling Congress for 12 years.

But Musgrave was unwavering in her stance. She and other conservatives argue that the main issue of college affordability lies in tuition increases, not interest rates.

"Having worked on the House Education Committee, I know we can do a better job with college access and affordability," Musgrave said in a statement, according to Gannett News Service.

Straayer said there are those on the right and left who have unbending ideologies, and Musgrave is one of them.

"You can call it rigid, you can call it principled," Straayer said. "Whether you like her or dislike her, she's got a particular ideological compass and she runs with it. Period."

Student debt is greater than it has ever been. Fewer than half of graduates had student loans in 1993, whereas nearly two-thirds did in 2004.

At CSU, the average graduate had about $16,900 in debt in 2005, compared with about $13,800 in 2001, according to the Project on Student Debt.

Lenders like Sallie Mae, who would eat the estimated $6 billion cost of slicing the interest rate, are opposed to the bill.

"A strategy of raiding a financial aid program to fund modest proposals is inadequate to the challenge," said Kevin Bruns, executive director of America's Student Loan Providers, a group that represents leading lenders, according to the Associated Press.

Sandy Calhoun, director of financial aid at CSU, said that the legislation overall will eventually benefit students, but she too had some concerns.

"I don't think the reduction of the interest rate necessarily increases access to higher education," she said.

Although the full benefit of the new interest rate would be felt only by students entering college in 2011 or later, the first incremental decrease - to 6.12 percent on the unpaid balance of the loan - would impact students who receive their first loan disbursement on or after July 1, 2007.

Those students would save about $2,200 over the life of an average-sized loan.

Managing Editor Vimal Patel can be reached at news@collegian.com.