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The Honolulu Advertiser
Posted on: Thursday, November 24, 2005

Battle lines drawn on student loan cuts

By Lois Romano
Washington Post

WASHINGTON — The fight is about to begin as hundreds of education, student and social service organizations plan to battle Congress over proposals that could add up to the largest student loan cuts in history.

The House last week narrowly passed a measure to reduce the deficit that included $14.3 billion in student loan cuts. The Senate version proposed approximately $9 billion in cuts.

The U.S. Student Association and congressional Democrats contend the cuts would force the average student borrower to pay as much as $5,800 extra over the course of a college education. On average, students borrow about $17,500 for education.

"These members have to go back and face parents and students in their district, and they are going to have to explain their votes," said Jasmine Harris, the association's legislative director. "These bills are unpopular, and you have a wide range of groups, from the NAACP to women's groups to poverty groups, working on this."

Republicans counter that the critics have distorted the measures, maintaining that although there might be some initial costs, the plan would ultimately help students by raising the limits on what freshmen and sophomores can borrow, and by eventually reducing the overall costs of the loans.

"First and foremost, people who say that this cuts student aid are just wrong," said Alexa Marrero, spokeswoman for Rep. John Boehner, R-Ohio, chairman of the House Education and the Workforce Committee. "What that implies is there will be less aid available, and that's not the case. We are trying to get more bang for the buck."

Right now, students pay as much as a 3 percent loan origination fee and an additional — but optional — 1 percent loan default or insurance fee. Under the GOP plan the origination fee would be phased out, but the insurance fee would be mandatory. Democrats say that is not really a savings because most guaranteed lenders discount or waive the origination fee, so the fees for the direct loans from the government will increase before they decrease.

Advocacy groups plan to bring the issue home to lawmakers who are in close races next year. Harris said that students have made about 25,000 contacts with legislators by phone, e-mail or traditional mail, protesting the cuts.