Law eases burden of students' federal loans

Sarah Goetz Staff Writer

A law signed into effect by President Bush last month may have a dual impact on students seeking higher education. The bill provides more financial aid options for graduate students, as well as allocating aid and debt forgiveness to students who wish to enter the public sector.

The Wall Street Journal reported that the new law will cut certain federal loan interest rates for undergraduates in half, lowering Stafford loan rates from 6.8 percent to 3.4 percent. The law also makes other changes to financial aid administration by doubling the amount of a student’s savings that are protected to $6,000 and raising the income level at which a student’s family is not expected to contribute to $30,000, thus encouraging rather than penalizing savings.

The law makes public service work a reality for students who would otherwise be limited by debts from graduate, law or other professional schools. It also stretches debt payments beyond the normally allotted time and offers debt forgiveness after the first 10 years of payments for those who have entered the public sector. Students who had gone to a law school with average expenses, for example, would get financing for 10 years and then be forgiven the remaining $100,000 debt. The forgiven money, would, however, count as taxable income.

Under the law, “public service” encompasses a wide array of careers, including public health, non-profit organizations, public-interest law and social work. The legislation has also allocated a total of $20 billion toward federal aid programs.

This aid arrives as increasing college tuitions nationwide continue to increase more rapidly than inflation, and as more and more students are forced to go into debt in order to afford a college education, thus making it harder to pursue graduate work.

A study by the Project on Student Debt has estimated that nearly two-thirds of the students enrolled at four-year institutions are graduating with debt from student loans.

And not only are more students borrowing money, but they are also borrowing more of it. Debt levels have more than doubled over the past several years; students now graduate with an average loan debt of $19,000. And each penny spent on college is one students don’t have for graduate school.

“It definitely affects the decision-making process,” said Lisa Kooperman, Director of the Office for Pre-Professional Advising and Fellowships. The cost and the prospect of incurring further debts can be “a big barrier for some people,” according to Kooperman, and often are deciding factors in their post-graduate plans.

Both current students and recent graduates can relate. “It’s definitely a concern,” said Erin Harper ’06, who is currently working for New York City law firm Sullivan & Cromwell. “Going to graduate school is only going to compound that debt [incurred at Vassar],” she said, explaining her decision to spend time in the workforce before continuing her education.

Harper also said that her financial situation “definitely influenced [her] job choice.” She elected to work in her current job because it allows her the hours and overtime opportunities to pay off some of her student debt before she enters graduate school in the next couple of years.

However, as the new legislation indicates, there are other means by which students can afford to continue on the education or career paths that they desire. Kooperman said that in discussing fellowship and other scholarship opportunities with students, she implicitly addresses the matter of student finances. She noted that the options she presents to students provide “ways to fund [students’] post-Vassar experiences and education. I try to give them the resources to do the research and to think about [their options] ahead of time.”

While paying for a college education can be a difficult process, Kooperman said that there are a number of different ways that students expense their post-graduate experiences and studies; students often “put together a variety of funding sources to fund their educations.” Though the task may be daunting, there are opportunities and resources at students’ hands to alleviate the stress of dealing with the expense of education.