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Morning News

Clinton Proposes Student Loan Changes

Aired August 10, 2000 - 11:01 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BILL HEMMER, CNN ANCHOR: We're going to start this hour in Washington, a new proposal about education in America. President Clinton, unveiling a new student loan proposals designed to make paying for a college education easier for millions across the country. He'll present his plan during a visit today to Chicago and DePaul University there where he is expected to arrive within the hour.

Live to the White House, Kelly Wallace, more on details of this.

How this different? or first, shake it down, Kelly, what's the proposal?

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well, Bill, basically in a nutshell, the president's plan is rewarding students in the form of lower interest rates, but there is a catch. The students must repay their loans on time. Mr. Clinton left the White House a little more than an hour ago for Illinois where he will lay out in great detail his new idea to try and make college loans more affordable and more available.

Here is how it works. Beginning this academic year, any students who borrow in the Direct Student Loan Program, those are loans offered the by the Department of Education, would get an immediate interest rebate of 1.5 percent of the total loan. The White House says that amounts to a savings of about $150 on $10,000 in loans. But again, the catch is students must repay their loans. Their first 12 payments must be paid on time.

The president will also announce that lower interest rates will be offered for students who consolidate all their student loans in the government's Direct Student Loan Program. And Mr. Clinton says these proposals would basically prevent a number of defaults by encouraging timely payment. He also says these will save taxpayers as much as five million dollars over five years.

Another component of the president's plan is helping college graduates who want to go into teaching but simply can't afford it because they have so many college loans. The president will announce a new proposed rule, which would forgive $5,000 in loans for five consecutive years of teaching in the neediest area -- Bill.

HEMMER: So Kelly, basically, there's incentive for students to go ahead and pay back the loan earlier to get a better break on the loan itself, correct? WALLACE: Absolutely, basically, if you go ahead and make your payments on time, again, to get the benefit you must make those 12 payments on time, you get that rebate; about $150 in savings.

HEMMER: Any way to gauge reaction just yet? people like it? people don't like it? or worth an experiment?

WALLACE: Yes, simply don't have a reaction yet. As you know, certainly the cost of higher education is a very big issue, certainly something that is getting a lot of attention in this campaign. So certainly something that would be applauded since it looks like it will be saving the government money and not really costing it anything to do it.

HEMMER: All right, not sure if you have a wind blower or something going on, Kelly, but we can hear it loud and clear in Atlanta. So thanks for hanging in there, Kelly Wallace, from the White House front lawn this morning, thanks again.

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