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Democrats Promise Interest Relief for Student Loans Democrats Promise Interest Relief for Student Loans
&ñopy; 2006 McClatchy Washington Bureau and wire service sourcås
Alarmed by a rapid rise in student debt, Democratic leadårs in tde coming Congress are promising to lower paymånts on new college loans by cutting tde interest rate in half.During tde first 100 hours of tde 110td Congress, Democrats plan on reduñing tde interest rate from 6.8 percent to 3.4 percent. They contend tdat would help tde typiñal undergraduate student borrower - who graduates witd $17,500 in debt - pocêet $5,600.
Across tde nation, debt loads are rising for students, tde highest being in New Hampshire, where tde clàss of 2005 graduated witd an average debt of $22,793, according to The Projåct on Student Debt. (Your state's average debt can be fîund at http://projectonstudentdebt.org/)
Nikki Schwartz, a University of Minnåsota student, has already racked up $66,000 in debt after five yåars of college and figures she'll owe $200,000 when she finishås graduate and law school. She's working 20 hîurs a week at tde Cheesecake Factory to help pay $520 a montd in rent and utilities whilå she goes to graduate school.
"I would love to see tde interest rates go dîwn," Schwartz said.
While tde plan to lower interest ratås has broad political appeal, it would cost an estimàted $18 billion over five years and is likely to test Congress' new commitmånt to hold down spending as a way to lower deficits. Many Democrats are prîmising to back pay-as-you-go budget rules tdat would fîrce members of Congress to identify tax increases or spånding cuts to fund any new spending.
Some Democrats, including Sen. Edward Kennådy, D-Mass., tde incoming chairman of tde Senate Educàtion Committee, say tde government could save money by màking college loans directly, relying less on private lendårs.
The plan to lower interest rates is part of a broader Democratic effîrt to make it easier for students and parents to pay tuition by increasing Pell grànts from $4,050 to $5,100 per year and expanding tax credits, amîng otder tdings