Student loan rates lowered

 By MARGARET CHAPMAN
Assistant City Editor

Interest rates for all student loans are now lower, thanks to a law signed by President Clinton last week. The Higher Education Act, an effort by the government to make college more accessible will, among other changes, preserve the lowered interest rate of 7.43 percent on student loans, marking a decrease from 8.25 percent.
"I think it will give students more confidence in taking on debt," said Cathy Thomas, associate dean for Enrollment Services and director of Financial Aid. "It really does have an effect on student aspirations."
"It will help me out a lot," said Noelle Claudat, a senior majoring in international relations. "It's a good thing because a lot of people couldn't go to college without financial aid."
The rate is effective immediately on all student loans, so even if a student is already paying back his or her loan, the rate will be lowered. The rate was changed on July 1 and is now guaranteed to stay low.
"If you've got (a student loan) for this year, you have the new rate," explained Thomas, "and if a student is in repayment, their rate went down."
The bill, a 700-page document brought to Congress by Rep. Howard "Buck" McKeon, R-Santa Clarita, was passed unanimously in the House in May, but was not signed by President Clinton until last Wednesday.
"It is remarkable to bring together congressional Republicans, Democrats, student groups, educators and the financial community to gain consensus on this higher education bill," McKeon said. "Together, we negotiated the lowest student loan interest rate in 17 years."
Other changes have been made as a result of the act, however, it is not yet a done deal. All changes except the lowering of student loan interest rates must wait for the budget to pass in Congress before anything can be implemented.
"We only have part of it," Thomas said. Even though Congress has passed the act that will authorize many changes, the appropriations bill has to pass in the congressional budget before any funding of new programs can happen. And if the appropriations bill does pass, Pell Grant amounts will be raised from $3,000 to a maximum authorization of $4,500 from 1999 to 2000, and will increase by $300 every year until 2003 to 2004. The Pell Grant program provides higher education vouchers for needy students.
This part of the act could have a great effect on USC students, as more than 4,300 undergraduates received Pell Grants last year, roughly 30 percent of the USC student population.
The Pell Grant changes could indirectly have an effect on all students because the university can distribute more of its own awards when more federal funding is available.
All changes from the bill will benefit students all over the country, whether attending private or public institutions.
"Pell Grants and student loans are basically vouchers," said David Foy, press secretary for McKeon. "You can take them anywhere."
The McGovern amendment is another change brought by the Higher Education Act, doubling the Pell Grant amount for students who graduate in the top 10 percent of their high school class.
"That's a wonderful thing," Thomas said, "that a very large percent of (USC) students were in the top 10 percent of their classes, but, will it be funded is again the question."
The act also includes a cap on tuition increases, and a move to streamline and modernize the financial aid delivery system.
Thomas recommended that interested students call their representative in Congress to ask about the appropriations bill they funded.

Copyright 1998 by the Daily Trojan. All rights reserved.
This article was published in Vol. 135, No. 30 (Thursday, October 15, 1998), beginning on page 1 and ending on page 17.