Student
loan cuts could increase interest rates
By
Joseph Serna
Online Forty-Niner
Staff Writer
Financial aid has taken a hit after Congress recently passed a bill cutting
$14.3 billion from student loan programs.
“
It’s a twisted way the math works,” said Dean Kulju, director of
financial aid at Cal State Long Beach.
In Kulju’s point of view, Congress passed the bill thinking it would
help balance the budget, and would only affect the banks that give loan money
to students.
“
I think it’s convenient logic,” he said. “It’s more
reactionary.”
While the money may only be taken away from the lenders, Kulju explained in
order to maintain a profit, the banks have to make up that lost money somewhere.
That’s where he guesses students will feel the difference.
With less money being sent out, which in turn means less interest being returned,
he suggested raising interest rates on student loans is a possibility.
The bill might impact up to a quarter of CSULB’s student population,
with about half of students at CSULB receiving some sort of financial aid,
and more than half of those receiving loans, Kulju said.
“
If you look at the interest rates, they’re still much lower than, say,
a credit card,” he said.
According to the Congressional Budget Office, the bill could create up to $5,800
in additional interest payments for students.
“
If you’re looking at loans with higher interest rates, it’s going
to discourage students to take out loans,” said Zahra
Billoo, Associated Students Inc. secretary for system-wide affairs.
California State University officials note California public university students
still enjoy some of the lowest tuition rates and lowest interest rates on student
loans compared to other public universities across the country, not including
the cost of living, according to Billoo.
“
When you look at fees alone, we are the absolute lowest, but when you take
in the cost of living [we’re not],” Billoo said.
In the end, many college students are more concerned with how they are going
to pay for school more than what their interest rate will be, Kulju said.
“
I’m kind of stuck right now because I have no choice [but to take out
a loan],” said Paul Maier, a student at CSULB. “I could complain,
but it wouldn’t do much.”
Even if interest rates had been raised before he began attending CSULB, Maier
said it would not have changed his decision to enroll.
The attitude that complaining will not make a difference is one of the things
that needs to change, Billoo said.
Voting, she said, is one of the easiest ways for students to flex their political
muscle, a muscle thus far under-used.
“
[Members of Congress] do what they want with higher education because it’s
not like they’re going to lose their place in Congress,” Billoo
said.
She said the divides cutting across students are no longer traditional. “It’s
no longer about color lines or gender, it’s simply about who can afford
college,” Billoo said.
While the motive behind the loan reductions may be to balance the budget, Billoo
sees other venues that should have been explored beforehand, such as criminal
institutions or the spending for the Iraq war.
“
One could argue that an educated society is less criminal in general,” she
said, which in turn would lower the incarceration rate among the population.”“The
CSU itself was founded on the motto of affordable education. It’s fair
to say we’re going away from our founding vision.”
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