A currently pending Congressional bill aimed to cut government spending in many areas will eliminate $12.7 billion in federal student loan programs if it passes. The bill would cut government subsidies to private lenders in an effort to decrease taxes and the federal deficit, while funding other programs simultaneously.
The cuts, which come as part of a $39.7 billion package of federal budget cuts, passed in the Senate on Dec. 21, with Vice President Dick Cheney casting the tie-breaking vote.
The House of Representatives already approved a different version of the bill, but, since the Senate made several small changes, the bill must now go back to the House for a vote.
The implications of the bill for Dartmouth students are not yet clear.
"Everything is so vague that it's hard to tell what will come out of this," Director of Financial Aid Virginia Hazen said.
Some aspects of the bill, however, are aimed to give students more money. One provision will increase loan limits for college freshmen, College sophomores and graduate students.
"The increased loan limits are good news for students," Hazen said.
The current loan limit of $5,500 for juniors and seniors will remain unchanged, while limits for freshmen will rise to from $2,626 to $3,500 and the limit for sophomores will go from $3,500 to $4,500. Graduate students will see their limit increased to $12,000.
The current bill would also benefit students through the creation of a new Pell grant program. This merit-based program would allot $3.75 billion to support low-income students who excel in math, science and foreign languages critical to national security.
The money used to fund the program would come from the savings achieved through the cuts to student- loan programs and other revenue-generating measures that the bill would implement.
One such revenue-generating measure would raise and fix interest rates for students and parents taking out loans. Under the current policy, the rates vary; yet the bill would increase and fix the rate at 8.5 percent for parents taking out loans for their children and at 6.8 percent for students.
Also, the bill would require borrowers to pay a 1 percent fee to government agencies that guarantee loans.
The vote on the new version of the bill could come as late as February. If the bill passes, President George W. Bush is expected to sign it.
