Clinton Unveils Programs to Ease College Loan Costs

Declaring a college education “more important than it’s ever been,” President Clinton unveiled two measures Thursday intended to make higher education more affordable by easing loan repayment costs and forgiving loans to college graduates who teach in lower-income communities.

Among the nation’s unmet needs, the president said in a speech at DePaul University, “helping people go to college is No. 1.”

“We have to provide all Americans access to opportunity, and that means access to college,” he said. The nation should set a goal of making sure that no one “stays out of higher education or drops out of higher education because of the cost.”

The program to provide teachers for lower-income areas--which face severe problems recruiting and retaining teachers, particularly those who have studied in college the subjects they are teaching--implements legislation passed two years ago.

It would forgive up to $5,000 in student loans for those who teach in needy schools for five consecutive years. At least one of the years in the classroom must have begun after September 1998. The U.S. Department of Education estimates that, through 2003, 25,000 teachers will be forgiven loans totaling $122 million. The program would take effect next July 1.

“They’ll be paying it back by teaching our kids,” the president said.

Under the second program, students and parents who hold direct student loans are being granted an immediate rebate on their interest equal to 1.5% of the loan, a payment that would affect more than 1.7 million students beginning in the coming academic year, the administration estimated.

To retain the benefit, the students and parents must make the first 12 payments on time. The estimated savings on a $10,000 loan would be $150.

The program would also lower by 0.8% the interest rate for students who consolidate their loans in the direct student loan program, saving them an estimated $500 on $10,000 in loans.

About 400,000 students are expected to take advantage of this, beginning with the fiscal year that starts Oct. 1.

Clinton said that the direct student loan program, a centerpiece in the administration’s effort to help students consolidate loans, had seen default rates on student loans drop from 22% when he took office to 9% now.