Democrats Slash Student Loan Rates

As promised, the Democratically controlled Congress voted to cut the interest rate on selected student loans yesterday:

AP -- The House legislation, passed 356-71, would slice rates on the subsidized loans from 6.8 percent to 3.4 percent in stages over five years at a cost to taxpayers of $6 billion. About 5.5 million students get the loans each year. ... Democrats conceded Congress needs to do more to make college more affordable. But they said reducing student loan interest rates was a significant step toward tuition relief.

The new Bill drew criticism from several Republicans, including Tom Price (R-Ga) who called it a "Bait and switch." An odd reaction -- especially in light of the fact that the GOP controlled Congress voted in June of 2006 to raise the interest rate on one of the most popular student loans, called Stafford Loans, from 5.3 percent to 6.8 percent. Yesterday's move reverses that change for the subsidized portion of certain student loans, potentially saving future, middle-income borrowers a ton of money:

LSU: The Daily Reveille -- This is not a small loan that affects a small percentage of the population. This is one of the nation's most utilized student aid programs. The analysis also estimates that the cut in interest rates, upon taking full effect in 2011, will result in a 14.5 percent decrease in the amount students would have to repay in a standard 10-year repayment plan, saving the student $4,000 by the end of repayment. This would undoubtedly make college a little more affordable for thousands of families.