BY DIANA BELLETTIERI | WASHINGTON SQUARE NEWS (NEW YORK U.)

In print | April 22, 2004

(U-WIRE) NEW YORK — College may be getting more expensive again.

The average loan-holding student could pay an additional $3,100 to $5,500 in interest if a bill introduced in the House of Representatives passes, according to a nonpartisan study conducted early this month by the Congressional Research Service.

The bill, part of the Higher Education Act, which must be re-authorized every five years, would allow the interest rate on consolidated federal student loans to fluctuate from year to year.

Current loans would not be affected, remaining fixed at about 3.5 percent.

Under the current version of the Higher Education Act, the interest rate on federal student loans initially fluctuates with the market rate. But if students consolidate their student loans, they can repay them at a fixed rate and fixed monthly amount.

Rep. George Miller of California Democrat said that allowing interest rates to fluctuate would be an “excessive burden” on students.

“There are better ways to change the [Higher Education Act] without putting college even further out of reach for many students,” Miller said in a statement.

With the deadline for re-authorization fewer than six months away, the debate is becoming increasingly partisan, said Alicia Hurley, director of NYU’s Office of Federal Policy. The division will likely force Congress to postpone the deadline, Hurley said.

“It’s disheartening,” she said. “It’s a tough climate to be doing any moderate negotiating.”

Yet Hurley said the interest rate was only a hot topic because rates were at a historical low and would probably increase if the rate was allowed to fluctuate with the market.

“If we were having this debate literally two years ago,” when the interest rate was around 7.5 percent, Hurley said, “I don’t think we would be getting such a reaction.”

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