Federal decisions on student loans looming

Weintana Abraha Guest Writer

60 percent of the current Vassar student population receives some form of financial aid, and many have student loans. In the next few weeks, federal decisions on student loans may make these students and others take notice. On Nov. 2, Vice President for College Relations Susan DeKrey sent an all-campus email about protecting federal student loan programs. DeKrey wrote, “Please take a moment to voice your opinion to your elected officials,” and included a link to an e-advocacy system.

This week, the House of Representatives may initiate changes to student aid to balance the budget. There are proposals to cut, or eliminate, the loan fees given to lender companies. These cuts would limit the number of loans that a lending company would be able to give, particularly the smaller lenders. Without the fees, lenders can’t give out as many loans, thus severely limiting countless students to necessary funds.

“Congress is being hijacked by all the problems it has to face; certain inequities pushed by this administration,” said Vassar Financial Aid Director Michael Fraher.

Fraher added that there is a problem with priorities in Congress as well. He said, “It is absurd that the oil industry is given $4 billion,” while loan support for higher education is being cut.

When asked how the College is protecting itself and the students, Fraher replied that the College has been in contact with New York representatives, including Senator Hillary Rodham Clinton.

According to Fraher, changes in student loan interest rates will not affect the number of Vassar scholarships, nor the amount of scholarship aid provided to students.
Title IV, of the Higher Education Act, is also under scrutiny right now. Title IV instructs Congress on its allocation of student aid; however, it is a living document and must be re-authorized every four to five years, as Congress is currently doing. This year, it is slated to be re-authorized to increase the maximum interest rate to 8.25 percent.

Changes to loan programs for higher education have been in the works for several months. Last July, the interest rates of Stafford and Parent Loan interest rates increased from 4.3 percent to its current capped rate of 6.1 percent. Both loans are part of the Federal Family Education Loans program.
Vassar students who have loans are thinking about long-term plans in light of these possible changes.
Rose Guiltinan ’08 said, “I don’t think its going to effect how much I take out, just how long it takes me to pay it off.”

Other students said it would affect the number of years they worked after graduating from Vassar. Gabriela Irina Dumitrescu ’09 added, “If they decide to increase the rate to 8.25 percent, I’ll probably have to work longer before I can go to grad school.”

The recent changes in the federal budget have already started to affect many students. Last year, 275 Vassar students received a Pell grant, while this year only 241 students did, resulting in a loss of approximately $64,000 collectively.

Administrators in the College’s Financial Aid Office are concerned about the negative effects that this will have for Vassar students’ financial future. DeKrey, who sent out the most recent all-campus e-mail about this, is currently on sabbatical and was unavailable for comment.

Fraher said that he is concerned that higher-interest loans will have a “disproportionate effect on students who come from [a] lower economic stratus.”

The affects of higher-interest loans would stretch to the credit of soon-to-be alumnae/i, as well as prospective students whose options for federal support are changing.

Fraher said that education is meant to be an equalizer, not something that causes more disparity between economic backgrounds.

“Education is the leveling field and allows people to go into [the] economic mainstream...[it] means equity and opportunity,” said Fraher.

Additional reporting by Anita Varma, Senior Editor