Cuts to federal loans pending

Students will have to dig deeper into their savings and search
for more loan and scholarship options to pay for college after a
recent vote in the U.S. House of Representatives to cut $14.3
billion of federal-loan funding.

The cuts came as part of a process called “budget
reconciliation,” by which the government hopes to decrease
the federal deficit, lower taxes and raise money for those affected
by hurricanes Katrina and Rita.

The close Nov. 18 vote, 217-215, is not the final say on the
funding cuts; the U.S. Senate passed a slightly different version
of the bill, which included about $9 billion in cuts to federal
loan funding, among other differences.

The two bodies will need to negotiate a compromise bill, which
will then have to be passed by both the House and the Senate again
before the federal loan cuts, and other stipulations, will go into
effect.

But whichever final version of the bill passes, students are
likely to see a cut to federal-loan funding, at least in some
amount.

The advantage of federal loans over private loans is that is
that the federal government pays the interest on the loans for the
time the student is still in school, said Ryan Smeets, Financial
Supports commissioner for the Undergraduate Students Association
Council.

If the cuts remain at $14.3 billion, each student receiving
federal loans will spend $5,800 more over the course of the loans,
which will mean higher levels of debt after graduation, said Anu
Joshi, president of the UC Students Association.

“It’s a lot of money that students are going to have
to pay,” she said, adding that the vote marked “the
largest cut to loans in history.”

In the short term, students will have to find alternate ways to
pay for their education, which may include working extra hours and
finding scholarships and private loans.

“It puts students in a crunch because now it makes them
pay more for school that they’re are already going to and
have to do more work to obtain more resources to pay for this fee
hike,” Smeets said.

Smeets emphasized that federal loans are not the only type of
aid available to students, and that there are other places they can
find at least some of the assistance they need.

“There are alternate sources, in the form of scholarships
and various other need-base grants that students should look
to,” he said. He cited academic and ethnic scholarships as
routes students can take to mitigate the impact of the loss of
federal loans.

But USAC President Jenny Wood said the search for those other
sources can be time consuming and there are not enough of these
available to compensate entirely for the cuts.

With increased pressures that come with less money to pay for
college, Wood said students may compromise the quality of the
experience they have at college by taking extra classes, working
longer hours, and giving up extracurricular activities in the
interest of finishing school earlier.