The House of Representatives passed a bill Wednesday that would raise the interest rates on student loans, according to the Library of Congress' database of legislation.
John Noble, press secretary for Rep. Rick Boucher, D-Va., said the Deficit Reduction Bill was originally passed in December, but several amendments had to be approved by both houses of Congress before the final bill could be sent to President Bush, who is expected to sign the bill into law.
"The House today passed a significant spending reduction package that will curb the growth of entitlement spending for the first time in years and help us stay on track to cut the deficit in half by 2009. I look forward to signing this bill into law," Bush said in a statement released Wednesday.
Interest rates for federal student loans will rise to 6.5 percent under the bill, according to Director of Student Financial Services Yvonne Hubbard. Interest rates are currently variable but have recently remained steady at 4.5 percent, Hubbard said.
"The cost of a loan for an individual has gone up hundreds, maybe thousands, of dollars depending on the cost of the loan," Hubbard said. "We recognize that the budget needs to be balanced, but to balance it by using the cost to a student is unfortunate."
Hubbard said she thinks the increased interest rates will deter some students from going on to graduate school.
Hubbard also stated that the University does about $15 million in student loan transactions a year as well as $9 million in parent loans, which will also see interest rates increased to 8.5 percent.
"A lot of parents have to borrow if they're not getting aid," Hubbard said. "There will be parents who want to help their students go to school but just can't afford it."
Student Financial Services already has already capped need-based loans and is planning on developing a financial literacy component to help students with financial planning to combat these increases, Hubbard stated.
The bill also includes provisions for SMART (Science and Mathematics Access to Retain Talent) grants, which are additional Pell grants students can receive if they have a rigorous secondary school curriculum.
The bill will also provide loan deferments for military service.
All provisions will go into affect July 1, 2006.
Charlottesville's U.S. representative,Virgil Goode, was not available for comment by press time.
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