Washington, DC – Rep. Joe Baca (D-Rialto) voted today to make college more affordable and accessible by cutting the interest rate on subsidized student loans for undergraduates in half (from 6.8% to 3.4%) over the next five years.  The bill cuts the interest rate in half in five steps:  from 6.8% to 6.12% in 2007; 5.44% in 2008; 4.76% in 2009; 4.08% in 2010; and 3.4% in 2011.  

The House passed the bill this afternoon by a vote of 356 to 71.

“This bill provides vital assistance to the low- and middle-income students and their families with the most financial need – those who receive subsidized student loans,” said Rep. Baca.  

In California, more than 228,000 four-year college students have subsidized student loans and would benefit from this bill.  Once fully phased in, the bill would save the average four-year college student in California starting school in 2011 with subsidized student loans $4830 over the life of their loans.

“Let’s make college affordable and accessible for all students,” Rep. Baca implored his colleagues in a speech today on the floor of the U.S. House of Representatives.      

Rep. Baca pointed out that making college more affordable is particularly important at a time when the costs of attending college continue to skyrocket.  Tuition and fees at four-year public colleges and universities have risen 41 percent, after inflation, since 2001 – putting college out-of-reach for more and more students.  “Many families cannot afford to send their children to college, and many students who start school have to drop out for financial reasons.  Students today rely more on student loans, but interest rates on student loans have also risen – increasing the cost of college even more.  The average student in California graduates with over $15,000 in debt.”

According to a recent study by the Congressional Advisory Committee on Student Financial Assistance, if Congress does not act, financial barriers will prevent 4.4 million high school graduates from attending a four-year public college over the next decade, and prevent another two million high school graduates from attending any college at all.

Rep. Baca said, “The American economy requires a highly-skilled and well-educated workforce so making college more affordable is key to our remaining strong in an increasingly competitive global economy.  Cutting interest rates on student loans is only the first step Democrats will take in making college more affordable.  Later this year, Democrats will also increase the maximum Pell Grant scholarship and take other important steps to reduce the financial barriers to a college education.” 

The bill is fully paid for by making modest reductions in certain lender and guaranty agency subsidies in order to make the student loan program more efficient and effective for students and for American taxpayers.

The bill is supported by dozens of organizations, including the American Council on Education, National Association of Independent Colleges and Universities, American Association for State Colleges and Universities, American Association of Community Colleges, Alliance for Equity in Higher Education, Hispanic Association of Colleges and Universities, College Board, College Parents of America, and the Institute for Higher Education Policy.