Who Will Student Loan Cuts Help, And When?

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Knoxville (WVLT) - The House passed a bill aiming to cut some student loan interest rates in half. As the bill heads to the senate, Volunteer TV's Stacy McCloud shows you who might see benefits from the bill and when.

It's the first week of spring semester here at Pellissippi State, which means the financial aid office is one of the busiest rooms on campus.

"We see hundreds of students everyday," says Paul McKinney, Director of Financial Aid.

Carlos Breaux is checking to make sure all of his scholarships are in place.

At over $1,200 a semester, his two scholarships help, but he still has one student loan he'll have to pay after graduation, and considering he's only a freshman, he's sure there will be other loans in the future.

So news that interest rates could be reduced from 6.8 to 3.4 percent is certainly welcomed.

"I think it is a good idea, I do, because if you need money for school that is a good way to help students out," says Breaux.

"Once they graduate and go into repayment they're payments are going to be less and the total amount of interest they will pay at the end of the loan is going to be considerably less," explains McKinney.

McKinney says if passed, the bill would help a lot of middle income families, but only if they are applying for a new loan.

It wouldn't help the some 4,000 students here that already have them.

"From what I understand it's for new borrowers only," McKinney says.

With the possibly just around the corner, McKinney says interest rates are adjusted each July 1st, some students may wonder, "should I wait?"

McKinney says they council students in situations like this, but adds it would be a good idea, since you're looking at what could be major interest dollars saved.

The proposal would cost nearly six billion dollars and affect a total of about five-and-a-half-million students.

Don't expect it to come without a fight.

The Bush Administration opposes the bill, because many Republicans feel more federal grants, the ones students don't pay back, would be a better idea.