Congress votes to cut Stafford loan rates

Some college students in Queens may find financing their education a little easier in the coming years as a result of a bill passed by a vote of 356 to 71 in Congress last Wednesday, January 17.
Known as the College Student Relief Act, it will cut interest rates on federally subsidized Stafford Loans, which are at a 16-year high, from their current rate of 6.8 percent to 3.4 percent over the next five years.
Subsidized Stafford Loans are need-based. The federal government pays the accruing interest while the student is in school and for the first six months after leaving school.
Non-need based Unsubsidized Stafford Loans are also available to students without financial need. Accruing interest on these loans must be paid while the student is still in school.
The new interest rates will only affect subsidized loans and will revert back to 6.8 percent when the bill expires on January 1, 2012.
Beginning this year, the cut will save students an estimated average of $2,360 over the life of the loans. Students who start school in 2011, when the interest rate cuts are complete, would save an average of about $4,570, according to information released by Congressmember Joseph Crowley, who, along with each of the five other Queens representatives in Congress, voted to pass the bill.
“A college education makes all the difference in building a solid career and in finding a better paying job with solid benefits,” said Crowley. “With this legislation, more families in Queens and the Bronx will be able realize the dream of sending their kids to college and providing a better future.”
According to Rena Smith-Kiawu, director of financial aid at Queens College in Flushing, approximately 1,800 of the school’s 14,000 students took subsidized Stafford Loans last year.
“In the long run students will be saving some money,” she said, indicating that any relief is better than none.
“But you’re not talking about unsubsidized loans,” Smith-Kiawu continued, explaining that many Queens College students do not qualify for the subsidized loans.
The loan relief comes as SUNY and CUNY tuitions increased by 30 percent over the past four years— from $3,766 during the 2001-2002 academic year to $4,895 during the 2005-2006 academic year—according to a report commissioned by Congressmember Anthony Weiner last September.
According to Cathy Tsiapanos, director of financial aid at York College in Jamaica where 393 of the school’s 7,000 students take the subsidized loans, the changes, “Will unfortunately have little to no effect on our York students.”
“The change in interest rate isn’t going to show up as any great dollar amount,” she said. “If your mortgage rate goes from 6.8 percent to 6.12 percent, how much of a difference is there?”
The rate cuts, “Are not putting any more money in students pockets,” so they can focus more on school and less on working to pay for school, Tsiapanos said.