Tufts students will face added difficulties in repaying federal student loans if the House of Representatives passes the Senate's budget reconciliation bill in February.
The budget bill, which was passed by the Senate in late December, contains almost $40 billion in spending cuts. Out of that $40 billion, $12.7 billion has been cut from federal student loan programs.
Advocates say the measure will help reign in government spending with federal tax cuts and the cost of war in Iraq. But many critics have protested the changes, alleging that the government is making the financing of higher education even harder.
According to Tufts' Director of Student Aid and co-manager of student financial services Patricia Reilly, the government is "cutting the profits that lenders will make on student loans and they are raising the fees on payback."
If the reconciliation bill is passed, students who consolidate their loans will be forced to pay those loans back at a higher interest rate.
According to Reilly, this budget bill is the result of a delayed reauthorization of student loan programs. The federal government is required to reauthorize student loan programs every six years. The government was scheduled to do so in 2004 but delayed the process.
"Typically the types of changes that [Congress is] talking about in the budget reconciliation is what would happened during reauthorization," Reilly said, "what happened was that Congress got impatient and this is kind of a back door way, a very unusual way to cut fed money."
Currently, when a student takes out a federal loan to finance their undergraduate education, they are given ten years to repay that money. If a student chooses to continue their education and takes out more loans, they can consolidate all of their loans and pay back the money with a fixed interest rate over a period of 20 years.
There had previously been a proposal in the Senate to eliminate the fixed rate, but it was withdrawn under pressure from student groups. The current bill raises the fixed interest rate and has increased fees associated with it.
The Senate has also proposed cuts on the subsidies it gives to banks which lend money to students.
When a student takes out a loan, the federal government pays the bank a subsidy to encourage them to make loans.
"Otherwise the bank would not make a loan to an 18 year old," said Reilly. "Basically the government has said they are going to cut that subsidy."
According to Tony Pals, who works with the National Association of Independent Colleges and Universities (NAICU), "parents would end up paying higher interest rates on the loans that are available to them," if the House passes the bill.
NAICU is currently working on a campaign to lobby House members to oppose the funding cuts.
"We are encouraging college presidents and college students... to contact their representatives and to explain to their representatives how important it is not to raid student aid," Pals said.
Tufts' is focusing its lobbying efforts on the reauthorization process, and as a result the school has not been able to do much work with the new budget bill. Mary Jeka, the Vice President of University Relations, who coordinates these efforts, could not be reached for comment.
There are approximately 1,500 Tufts undergraduates who are financing their education with federal loans and about 1,000 graduate students doing so.
"The budget is probably not going to change students' situations while they are at Tufts," Reilly said. "What I expect will happen is that when they go into repayment, that repayment is going to be a little more difficult."
The budget reconciliation bill does include new aid programs for students studying math and science. In addition to offering one year grants from $750 to $4000 to math, science, and engineering students, the bill has also set aside money for students who have completed what the federal government deems to be a rigorous course of study in high school.
Lobbyists from the education sector argue that these small grants do not make up for what is being cut.
"Three point five billion dollars is going to new grant programs versus 13 billion that is being cut," Pals said.
As for Tufts students, awareness of the cuts in the reconciliation bill is spotty.
Sophomore Laurel Schrementi, who took out federal loans during her freshman year, said that she had not heard of the bill.
Sophomore Kyle Machado did know about the reconciliation bill. When asked if he had written to his congressmen, however, he said, "I haven't been that active."
