Clinton Signs Bill Cutting Student Loan Interest Rate

College students could save up to $700 on loan repayments under legislation President Clinton signed Wednesday to lock in interest rates at their lowest levels in 17 years.

He enacted the rate cut, part of a broader education bill that also pushes Pell Grants to their highest level, in a White House ceremony also attended by members of the Republican-led Congress.

“Today, with this lowering of the interest rates, . . . we can really say that every high school graduate in America, regardless of income, can afford to go to college,” the president said.

“We didn’t play politics with our children’s future,” said Rep. Howard P. “Buck” McKeon (R-Santa Clarita), who sponsored the House bill.

The new law is expected to save borrowers an estimated $11 billion over five years by locking in for that period a new interest-rate formula, based on Treasury bill rates and added points, for student loans. The rate would be 7.46%, down from more than 8% last year, for graduates starting to repay their loans under the Direct Loan and Government-Guaranteed Loan programs.

A typical student borrower at a four-year college, graduating with $13,000 in debt, would save about $700 over a standard 10-year repayment period, the White House said.

The legislation also raises the maximum authorized amount for Pell Grants from the present $3,000 to $4,500 a year in 1999-2000, and, in steps, to $5,800 in 2003-04. But Congress has yet to provide the money, and the Clinton administration requested a spending level for this fiscal year that would raise the maximum grant by only $100.

The new law also authorizes steps to improve teacher preparation, monitor college costs, report campus crimes, monitor hate crimes and discourage drug and alcohol abuse.