H.R. 5 to Reduce Interest Rates on College Loans

Congressman Tim Bishop, D-New York, was on C-SPAN this morning to discuss H.R. 5, the College Student Relief Act of 2007.

As promised by Speaker Pelosi, H.R. 5 is part of the Democrats' "first 100 hours" agenda. It amends the Higher Education Act of 1965 using a "phased-in" approach to reduce the burden of college expenses by gradually decreasing the interest rate charged for student loans.

Here are some highlights of the the C-SPAN broadcast:

• The interest rate, currently set at 6.12%, will be reduced to 3.4% by 2011.
• The cost of the bill is estimated at $6 billion over 5 years.
• As required by the newly passed paygo rules, the cost of the bill cannot increase the deficit. Its cost will be offset by reducing guarantees to lenders.
• Because of the paygo requirements, the cut in rates is not permanent, but it is the intent of the Democratic leadership to make eventually make the rate cuts permanent.
• The bill is "closed rule" meaning no amendments are allowed.
• Bishop sees this as the first in a series of legislation designed to make college more affordable by the group most squeezed by the recent increase in college tuition costs - the middle class and upper middle class.
• The Senate bill equivalent will be introduced by Senator Kennedy.
• The rates do not apply to current loans. They will be in effect for loans originating after July 1, 2007.

The bill is scheduled for debate on the floor of Congress later this morning.