May 1, 2002

Harman Criticizes Bush Plan To Raise Federal Student Loan Costs

-- "We need to make college more affordable, not less. This plan is a bad idea." --

WASHINGTON D.C. - Rep. Harman today attended a rally with UCLA students and alumni to protest a proposal by the Bush Administration that would prohibit almost 700,000 students per year from taking advantage of optimal interest rates in order to lower their student loans interest payments. After the rally, Harman issued the following statement

"Making college education affordable is critical for expanding opportunity and creating a talented, well-prepared work force for the future. Federal college loan programs help middle income and lower income working families pay for college in the face of rising costs for tuition, room, and board.

"Every year, nearly 700,000 students consolidate their student loans in order to benefit from a fixed, lower interest rate. This saves money, and helps them pay off their loans sooner. It can be applied over the full term of the loan - up to 30 years.

"Unfortunately, under the Administration plan, consolidated loans would have variable interest rates, which fluctuate with market rates. This means a student with a $20,000 loan would have to pay about $5,300 more in interest over the term of the loan. For many students, this prospect means no more schooling.

"Why this change? With projected deficits far into our future, the Administration wants to collect an extra $1.3 billion dollars from students and graduates, regardless of the impact on them. Postponing parts of the $2 trillion back-loaded tax cut is a better way to find money.

"We need to make college more affordable, not less. This plan is a bad idea."

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