A recent bill passed by Congress will establish constant interest rates for federal student loans starting in 2006 in order to make them more accessible for low-income students.
Currently, the interest rates of federal student loans "float" with the 91-day Treasury bill. The legislation, which was passed without opposition, amends the Higher Education Act of 1965 to fix that rate at 6.8 percent for loans to students and 7.9 percent to parents, starting in 2006.
Due to the current economic downturn, student loan interest rates are currently at their lowest rate in history at just under six percent.
The fixed interest rate will ensure that interest rates of student loans will remain low even after interest rates go up in the case of an economic upswing.
The law was changed to "assure availability of higher education to poorer students," said Scott Galupo, the committee spokesman of Congress' Education and Workforce Committee.
The bill came largely as a result of student group pressure, including that of the U.S. Students' Association, according to Galupo.
Some political action committees, including Ralph Nader's Public Interest Research Group and loaners' organizations like those of Fannie May, also advocated the bill.
"Basically every segment that had vested interest in the system supported it," said Galupo, adding that the total cost to the government for subsidizing the low rates will be over $8 billion.
According to a PIRG Higher Education Project press release, the bill will save the typical student borrower $680 over the life of the loan.
Thirty-nine percent of the Dartmouth student body receives financial aid of some type, Financial Aid Director Virginia Hazen said previously.
The average grant, including federal Pell Grants and Perkins or Stafford loans, comes to about $19,000, according to Hazen.
According to the Financial Aid office, for the 1999-2000 academic year, the College awarded a total of over $29 million in scholarship assistance.
Galupo said that rates will be allowed to float until 2006 because the rate is already historically low and because of budgetary reasons.
