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SALT LAKE CITY (AP) -- The Deficit Reduction Act passed by the U.S. House on Wednesday could drive up a typical Utah student's loan debt by $1,360, a Utah Higher Education Assistance Authority official said.
The act would cut $12.7 billion from federal student loan programs as part of a five-year, $39 billion savings plan.
Most of the $12.7 billion cut will stem from locking student loans into a fixed interest rate, said Dave Feitz, associate executive director of the assistance authority.
He said a 6.8 percent fixed rate would replace the current 5.3 percent variable rate students are now eligible for on Stafford Loans.
That could mean an extra $1,360 over the 10-year life of the average $15,000 Utah student debt for a four-year degree, he said.
"Sure, the monthly payment isn't that much different, but over the life of the loan it costs students a significant amount of money," he said. "It makes the student loans more expensive for students, which we think is the wrong approach at a time when the nation needs to be investing in higher education."
The fixed loan rate, which would become effective July 1, could not come at a worse time, said John Curl, director of financial aid at the University of Utah. With increasing tuition rates and cost of living, students are already struggling to pay for education.
"There hasn't been an investment in this program to begin with and then for the majority of the deficit to be reduced by student aid, that's disheartening," Curl said.
Supporters of the bill say the measure stabilizes the student loan system and offers incentives for students, like higher loan limits and lower student fees. In addition, the law increases grant aid for math and science students.
"We can expand college access for low- and middle-income students while simultaneously generating savings for all American taxpayers by reducing program waste and inefficiency, and giving the programs a strong financial footing for future generations of students," states a November letter from the U.S. House Committee on Education and the Workforce.
(Copyright 2006 by The Associated Press. All Rights Reserved.)
