EDMOND —
College students and their parents can now breathe a little more freely as Congress voted Friday to extend the lower interest rate for federal student loans.
The U.S. House of Representatives passed the legislation in a 373-52 vote. All Democrats present voted in favor of the bill, 52 Republicans opposed its passage.
The bill then moved onto the Senate, which approved it 74-19.
Congressman James Lankford, R-Edmond, voted in favor of the bill’s passage. Sen. Jim Inhofe, R-Oklahoma, voted yes and Sen. Tom Coburn, R-Oklahoma, did not record a vote.
President Barack Obama has made preserving student loan rates a political point in his re-election bid. He has already indicated in a statement by White House press secretary Jay Carney that he will approve the legislation.
Without government action, loan interest rates would have doubled from 3.4 percent to 6.8 percent July 1, returning to the same rate as in 2007.
Although the vote came Friday afternoon in Washington, D.C., a closed-door agreement to preserve loan rates had been agreed to by congressional leaders on Thursday.
It carries with it a $6 billion price tag, but lawmakers agreed to fund it through pension changes.
Federal subsidized loans remain at the previous rate of 3.4 percent, but the bill only provides for it to remain so for one year and was actually packaged in with a larger bill to extend federal highway programs and the National Flood Insurance Program.
For students taking out loans for the upcoming fall and spring semesters, this means the interest rate will continue in the status quo on loans that do not generate interest while they are in school, called subsidized Stafford loans.
“It means I’ll have an opportunity to continue my education without getting into too much debt,” said Dylan Billings, a political science junior at the University of Central Oklahoma.
The unsubsidized Stafford loans, however, remain at a 6.8 percent interest rate, said Susan Prater, UCO director of financial aid. Those loans gather interest while students are going to school.
“There are a lot of students that have unsubsidized loans,” she said.
Although keeping subsidized loans at the same rate is good for students, Prater warns students to remain aware of the pitfalls of student loans.
“Students need to have financial awareness or have financial education,” said Prater — who noted that UCO does entrance and exit student debt consulting. “Student loans are going to be around for a while.”
Rather than taking heaps of cash from the government and amassing loan debt, Prater suggests students only take out what’s needed to pay for classes, books and other school-related costs.
And although Prater is thankful that the government was able to agree on interest rates this year, she said a more permanent fix is needed.
“Because time was of the essence, I think they were both able to come to an agreement,” she said.
Clint LaRue, Oklahoma Christian University director of student financial services, said the current setup is just a patch.
“Everyone wants low interest rates and that’s a good reason,” he said. “But it’s really been made a political windstorm.”
Coburn, R-Muskogee, drafted a bill on June 6 called the Comprehensive Student Loan Protection Act with Sen. Richard Burr, R-N.C., which would overhaul student loans.
In an estimation from the Congressional Budget Office, Coburn’s bill could potentially save $52 billion during 10 years and would maintain interest rates for many borrowers.
Yet the bill has not gained traction since its introduction.
And while sitting in the UCO library, Billings, who estimates he’ll have as much as $50,000 in loan debt when he obtains his doctorate degree, agrees at least something else needs to be done.
“We’re not fostering a society where people feel they can afford college,” he said. “People think ‘can I afford to do this,’ rather than ‘should I do this?’”
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