4
MONDAY, APRIL 4, 2005
Bill to remove fixed interest
BY VICTORIA WILSON
STAFF WRITER
A possible change in the way
the federal government gives out
student loans could save students
money and make the system more
fair, proponents say.
Republicans in Congress are
suggesting that lawmakers allow
the interest rate on federal loans
to vary with the market, a proposal
that would mark a major shift from
current, fixed-rate borrowing.
Experts in student financial
aid, student advocacy groups and
the Bush administration all have
increased pressure on Congress to
allow the change.
As part of the federal financial
aid system, students can consolidate
their outstanding loans into one pay
ment, made to the government dur
ing a longer period of time. Under
the current system, interest rates for
such loans are fixed at the outset,
benefitting those who consolidate
when rates are low and hurting those
who do so when rates are higher.
Refinancing is not permitted, so
the rate is “locked in” for the life of
the loan. But variable rates would
fluctuate yearly.
Steven Brooks, executive direc
tor of the N.C. State Education
Assistance Authority, said the
fixed-rate system can produce
unfair disparities among students.
“I think that making these loans
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variable is probably the fairest way
to make sure that current students
and former are on a level playing
field,” he said.
The urgency to change to a vari
able-rate system stems from pro
jections that interest rates soon will
increase from this year’s historic
low of 3 percent, making consolida
tion at a fixed rate less attractive.
Rep. Thomas Petri, R-Wis., is
in the process of drafting legisla
tion that would allow borrowers to
choose between the fixed-rate sys
tem and the variable system.
Petri’s proposal would maintain
an existing 8.25 percent cap on
student loan interest, even with a
variable rate. The plan also would
produce a higher borrowing rate for
fixed loans, meant to encourage stu
dents to opt for the variable system.
Jason Delisle, legislative assis
tant to Petri, said a variable-rate
system likely would cost less for
many students and save the gov
ernment money.
“(Petri) thinks that it provides
the best benefit to borrowers at the
most responsible cost to taxpayers,”
Delisle said.
The Congressional Budget Office
projects government savings of $2
billion if all students were to opt
for variable-rate loans.
The Coalition for Better Student
Loans, an organization comprising
higher education advocacy groups
UNCGiCampus.com
and prominent lending firms, says
its main concern in the process is
fairness.
Pat Smith, policy scholar-in-resi
dence for the American Association
of State Colleges and Universities,
said her organization works with
the rest of the coalition to elimi
nate fixed-rate loans altogether.
“We want to make sure that no
student would get stuck at a very
high interest rate,” Smith said.
The AASCU favors a variable
interest rate system with a cap at
6.8 percent.
But legislators who oppose the
change argue that variable rates
could cost borrowers more money in
years when interest rates are higher.
Tom Kiley, press secretary for
Rep. George Miller, D-Calif., said
students should not be subjected to
any potential cost increases.
“In light of millions of students
paying more for college, Congress
should do everything in its power to
keep college affordable,” he said.
The measure will be considered
during the reauthorization of the
Higher Education Act, which is
slated to occur later this year, and
debate is likely to be heated.
Kiley said many Democratic law
makers will work to keep the fixed
rate system. “We plan to fight hard.”
Contact the State & National
Editor at stntdesk@unc.edu.
News
With new Cabinet, CAA
anticipates a fresh start
Group to oversee
Homecoming
BY KATIE CLINE
STAFF WRITER
The Carolina Athletic
Association officials taking office
Tuesday said the organization is
ready to start on a clean slate after
undergoing a year of scrutiny.
With a plan for change and a
new Cabinet, officials said, they’re
taking steps to to ensure that
problems encountered this year
will not arise again.
“We looked at the total package,”
said CAA President-elect Justin
Johnson.
When forming the CAA Cabinet,
officials looked for motivated and
eager students, he said, noting that
experience was not the sole factor
in making selections.
And this year’s Homecoming
should run more smoothly than
last year’s, thanks to the efforts of
the Homecoming Collaboration
Committee that Student Congress
created in February, he said.
Last year’s Homecoming was
plagued by controversy when CAA
failed to secure Sister Hazel for the
concert, as officers had promised to
do. The cost to bring the group to
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To ensure no one person makes
big decisions for Homecoming, the
committee includes both student
and professional campus leaders,
Johnson said.
The group includes leaders from
a variety of campus organizations,
including the General Alumni
Association, the Student Rams
Club and Congress.
He has tried several different
measures to get input from cam
pus organizations, he said, but he
has gotten little response.
“It is a way to get big campus lead
ers at one table,” said CAA President
Lindsay Strunk, adding that she
hopes members will be able to con
tribute conceptually and financially.
James Hollins, the new
Homecoming chairman, said lead
ers still need students to participate
on the committee. “It will definitely
help to have experienced people who
have put on a concert before or have
connections in the music industry.”
But with more input from differ
ent groups, the committee will have
more voices to accommodate.
Anita Walton, manager of stu
dent and young alumni programs
for the GAA, said she wants to make
sure students have an enjoyable
Homecoming so they will return to
ah? Mg (Tar UM
future events.
“We want to support students
and make sure they have a memo
rable experience,” she said.
Other committee members seek
specific ways to make Homecoming
work for their constituents.
Jen Bushman, president of the
Graduate and Professional Student
Federation, said she is brainstorm
ing ways to make Homecoming
better for graduate students.
The CAA also has faced prob
lems concerning the use of its allot
ted basketball tickets. Yet the new
Cabinet features the same ticket
distribution chairman.
Johnson said he based the deci
sion to retain Charles Robinson on
the ticket office’s good experience
with him this year.
“It makes sense: It is the person
with the most experience,” he said.
“It comes down to who the ticket
office wants.”
Luke Farley, chairman of the
Rules and Judiciary Committee of
Student Congress, said Congress
will keep a closer eye on what is
going on in the CAA. “I’m not con
cerned with who runs (the ticket
distribution) as long as they stay
within ticket guidelines.”
Contact the University Editor
at udesk@unc.edu.