Clinton Announces More Affordable Student Loans

Aug. 10 -- President Clinton offered a simple message today: It pays to pay those student loans on time.

At a round-table discussion at DePaul University, Clintonannounced a plan to give lower interest rates to college studentswho make their first 12 loan payments promptly, a move that wouldsave them and their parents roughly $600 million over the next fiveyears.

Clinton was making the changes through an order to the EducationDepartment. He does not need approval from Congress.

“I think helping people go to college is number one,” Clintonsaid. “If I didn’t have a chance to go, I wouldn’t be heretoday.”

Deepening the Commitment“These new steps reflect the president’s long-standingcommitment to making college more affordable for both studentsand parents, and to ensuring that college debt is not a barrierto community service,” White House spokesman Elliot Diringersaid.

In the Clinton administration’s first budget, in 1993,student loan fees were reduced to 4 percent from a maximum of 8percent. Student loan interest rates were reduced in 1993 and1998.

Last year, the administration reduced direct loan fees to 3percent.

Lower Fees and RatesUnder the new plan, students and parents borrowing directstudent loans will receive an immediate interest rebate equalto 1.5 percent of the loan. More than 1.7 million students ayear will receive the rebate when they borrow, beginning in the2000-2001 academic year.

Students and parents must make their first 12 payments ontime to keep the benefit. With the rebate, the averageundergraduate could save $150 on $10,000 in loans — theaverage loan amount held by undergraduates.

“You don’t have to be a math teacher to know that’s pretty goodarithmetic,” Clinton said.

Lending a Hand to TeachersHe also announced a loan forgiveness effort for college studentswho decide to teach at schools in needy urban or rural areas. Thenew rule would forgive up to $5,000 in loans to borrowers afterthey have taught for five consecutive years.“They will be paying it back by teaching our kids. This is anassignment we cannot afford to fail,” Clinton said. “I think itis a tiny investment for the rest of us as a nation to make.”