The University has joined Senate Democrats in a national campaign against President George W. Bush’s new financial aid proposal.

Announced Sunday, Bush’s plan would fix a growing debt in the Pell Grant program and eliminate the federally subsidized fixed rate on consolidated loans – a fiscal tool that allows students to lump all their loans together and pay a static interest rate until the debt is absolved.

Under the proposal, students would pay a fluctuating interest rate that would resemble the national rate each year. And it could cost them thousands.

This year, 18,000 University students are accepting federal student loans. By the time they finish school, most undergraduates rack up $14,470, and most graduate students accrue $32,000 in debt.

University financial aid officials estimate the average undergraduate would pay $3,700 extra in interest under Bush’s proposal. Graduate students would pay $11,000 more. Their analysis is based on a 15-year payback period, which officials said is consistent with average federal loan agreements.

“Our position at the University is we don’t want this to hurt University students,” said Jim Kennedy, student financial aid senior associate director.

He said the University is “very much” against Bush’s proposal.

Kennedy estimated students’ interest rates would fluctuate around 6.75 percent with Bush’s plan.

Currently, students consolidating their loans before July 1 will pay a fixed rate of approximately 4 percent.

“That would be the lowest it’s ever been,” Kennedy said. “Now that costs are going up in tuition, this is a great opportunity to lock into that 4 percent rate and save thousands of dollars.”

Bush administration officials say eliminating the fixed rate is necessary to cover a $1.3 billion deficit in the Pell Grant program – a need-based grant for low-income students.

Statewide, 67,168 students receive the grant.

Congress approved a per-student increase in the maximum Pell Grant from $3,750 to $4,000 last year but only provided enough funding to cover a grant of $3,600.

The Department of Education has also seen an increase in demand for Pell Grants, especially among independent students with children.

“The problem starts snowballing as more and more students become eligible,” said Trent Duffy, spokesman for the U.S. Office of Management and Budget. “We’re trying to get back to a balanced budget. We have a big cost for the war and security, and we hope to find funds to cover this hole.”

Senate Democrats are launching a national campaign to incite students to rally against the administration’s proposal.

“The higher education community is going to be very loud and clear that this is unconscionable,” said Sen. Paul Wellstone, D-Minn. “As far as I’m concerned, we’re going to oppose this with all our might.”

In a teleconference call Wednesday, Wellstone joined Sens. Ted Kennedy, D-Mass., and Patty Murray, D-Wa., to speak with college newspapers nationwide about the proposal’s repercussions.

They said the average U.S. student would pay an extra $10,000 in interest under Bush’s plan – a crushing obstacle in times of increasing tuition.

Kennedy said holding off on Bush’s $1.3 trillion
Congress-approved tax cut would provide the funds to fill existing deficits in the national budget.

The senators also said it is current policy to extend the Pell Grant debt into the next year, where surpluses in the program often cover the deficit.

But Duffy called that “gambling” and said Congress approved 1,600 special education projects last year – including $200,000 for the Rock and Roll Hall of Fame – that could have been used to cover the Pell Grant debt.

But between the politics lie the students. University sophomore Wilt Hodges takes out $3,500 in Pell Grants each year. After receiving a degree in biology, he hopes to go to graduate school, and in the end he will owe $21,000 to the federal government.

“I’m not even going to call it a loan,” he said. “I’m starting to call it a second mortgage.”

Hodges said he was concerned the elimination of a fixed loan rate would discriminate against lower income classes but supported the administration’s endeavor to fix its growing deficit.

“As long as they can make it balanced and as fair as possible, then I’m all for it,” he said. “I understand sacrifices have to be made.”

K.C. Howard welcomes comments at [email protected]