Higher student loan rates bad news for Native students

By Alysa Landry
Special to the Times

WASHINGTON, August 1, 2013

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T he doubling of interest rates on federally subsidized student loans is bad news for every student, but worse news for Indian Country, according to Native student advocates.

Interest rates on new federal subsidized student loans doubled July 1, from 3.4 percent to 6.8 percent, heaping additional financial strain on millions of students who take out loans to pay for tuition, housing and books.

The increase went into effect automatically when Congress failed to act by the first of the month on proposed legislation that would tie federal loans to the financial market. A similar impasse last year resulted in a one-year extension of the lower interest rate.

The Senate on July 24 passed a measure linking loans to the market, providing lower interest rates now but higher ones as the economy improves. The House passed a similar measure in May and the two chambers are expected to come to an agreement by the time students sign loan documents for fall semester.

If Congress agrees, the measure will be retroactive. If it fails to compromise, the rate will remain at 6.8 percent.

$1,000 additional debt

According to White House estimates, the doubled interest rate would add about $1,000 to the average student's college debt, which is approximately $28,000 by the time a borrower graduates with a four-year degree.

Either way, the increase may affect Native students disproportionately, said Carrie Billy, president of the American Indian Higher Education Consortium. Many Native students can't afford to take out student loans, and those who do borrow - and return to reservations to work - often face high unemployment rates, making finding a job and repaying their loan difficult.

"High-interest-rate loans not only harm the student and their family," Billy said. "It hurts our tribal nations and ultimately threatens the competitiveness of the entire country because every student we lose is one less student contributing to the rebuilding of our tribal economies and contributing to American's future workforce."

Very few tribal colleges participate in student loan programs, Billy said. They try to keep their tuition and fees low so Native students aren't overburdened by debt.

"However, we know that many of our graduates transition to other colleges and universities to continue their education, and these students often find it an absolute necessity to take out loans," she said. "For these American Indian students - who have some of the lowest family income rates in the country and who will return to their reservation communities to work after graduation - doubling the interest rate on their loans would have meant the end of their education. They simply would not have been able to continue. They could not afford to carry such a heavy financial burden."


The Office of Navajo Nation Scholarship & Financial Aid does not track the number of students who take out federal loans, Office Director Rose Graham said.

Funding for Navajo scholarships and financial aid comes from the tribe's general fund, trust funds, corporations and the federal government, with 76 percent coming from Washington, D.C. More than $14.5 million was awarded to Navajo students in 2011, according to reports from the Scholarship & Financial Aid office.

Between 13,000 and 17,000 students apply for scholarships, grants or financial aid from the Navajo Nation every year, but only 5,800 students receive awards. That means the bulk of Navajo students are seeking aid elsewhere.

"Most of our students are very good about seeking other financial aid," Graham said. "They apply for various types of grants."

Under the Senate bill, which passed with an 81-18 bipartisan vote, undergraduates this fall would borrow at 3.9 percent interest. Graduate students would borrow at 5.4 percent and parents at 6.4 percent.

Rates would rise as it becomes more expensive for the government to borrow money, but the bill caps interest rates at 8.25 percent for undergraduates, 9.5 percent for graduate students and 10.5 percent for parents.

According to Congressional Budget Office estimates, rates would not reach those limits in the next 10 years. As written, the interest rates are expected to cut the national deficit by $715 million in the next decade and federal loans would be a $1.4 trillion program.

Billy said Native educators are pleased with the Senate's legislation to prevent the doubling of student loan interest rates, but she said it was "not a perfect fix."

"Although rates will not double, which is good, interest rates ... would be tied to the 10-year Treasury note rate," she said. "This compromise means that interest rates will be low for now and that students enrolling this fall will have affordable loan interest rates. However, because the bill uses a market-based rate, future interest rate increases could significantly raise the costs of borrowing."

If this happens, she said, "we expect that American Indians who depend on loans to complete college - and in particular, graduate school - would be forced to drop out."

Manuelito scholars already planning on giving back

By Antonio Ramirez
Navajo Times

TWIN ARROWS, Ariz. - It may be the Navajo Nation's best investment.

The nearly $1 million the Nation will spend on Chief Manuelito Scholarships this year will translate into many times that in improvements, if all the scholars' plans come to fruition.

Parents, guest speakers, and onlookers - including Navajo Nation President Ben Shelly - awaited the award presentations for the 113 recipients of the 2013 Chief Manuelito Scholarship last Friday at the new Twin Arrows Casino.

Many of the awardees seemed truly inspired, outlining plans to come back after they finish their educations and help their people.

In traditional dress, Tracie Benally accepted her award and spoke of her plans for the future. This fall, Benally will attend Smith College double-majoring in education and pre-law. Upon graduation her plan is to return to the Navajo Reservation, teach with Teach for America, and then go off to law school so she can eventually become an advocate for the Nation.

If Benally does wind up teaching with Teach for America, it won't be her first time working with the organization. While still attending Crownpoint High School, she worked for Teach for America as a recruitment coordinator, calling and interviewing college students in order to convince them to come to the Navajo Reservation and teach.

Gallup High School graduate Stoney E. Denetclaw will attend New Mexico State University in the fall and major in chemical engineering. He would like all Navajos to have equal access to technology.

"I want to be able to give everybody the opportunity to have the same advantages as everybody else," said Denetclaw. In order to reach his goal he wants to improve solar panel technology so that he can enable regions without electricity to "power satellite, broadband Internet connection so [everyone] can have interconnection and learn from it."

There were those who couldn't make the award ceremony, including Sheldon Coolie from Tuba City High, who was away at the Naval Academy Preparatory Program. His mother accepted her son's award on his behalf.

Throughout the next 10 months Coolie will be a part of the program, which is designed to prepare students to enter the U.S. Naval Academy.

The Naval Academy is one of the top-ranked schools in the nation. The application process is rigorous and requires an applicant with a high academic standing, evidence of strong moral character, and a nomination from an official source - usually a member of Congress or the Vice President. If Coolie can make it through the Naval Academy Preparatory Program requirements, he will move on to the Naval Academy.

Navajo Preparatory School graduate Damon J. Clark is bound for Harvard University where he will study economics.

"I took a class from San Juan College and just took an interest," he explained. "I was thinking about my own situation growing up on the Navajo Reservation."

With his degree, Clark hopes to develop relationships with future business leaders who can invest in the Navajo economy and provide jobs.

All recipients of the Chief Manuelito scholarship, who receive $7,000 per year, must reapply for the scholarship each year, maintain a GPA above 3.0, and complete the required number of units to be considered a full-time student. If students do not apply for the scholarship by the deadline they will not be awarded money.

Speaker Rose Graham from the Office of Navajo Nation Scholarship and Financial Assistance made special mention of the large number of applicants who wait until the last day to apply. On the day of the deadline fax machines often freeze, phone calls go unanswered and many students end up missing out on the scholarship.

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