Students To Congress: Don’t Double Student Debt Rates
With the student loan interest rate about to double this July for almost 8 million loan borrowers, US PIRG and coalition partners delivered over 130,000 letters to Congress urging a different plan.
“Today student voices will be heard loud and clear by delivering over 130,000 letters to leaders in Congress. Our message is simple: Don’t double student debt rates,” said Rich Williams, Higher Education Advocate for US PIRG. “Rising college costs, tight family finances and uncertain job prospects pack a triple whammy for student borrowers. In this economy, the last thing we should do is double the interest rates on student loans.”
If Congress does nothing, the average subsidized Stafford loan borrower would have $2,800 in increased student loan debt over a 10-year repayment term. Borrowers who assume the maximum $23,000 in subsidized student loans will see their interest balloon to about an additional $5,000 over a 10-year repayment period and $11,000 over 20 years.
Students like Northern Arizona University freshman Tyler Dowden can’t handle more student debt. “If student loan interest rates increase I will pay more than $3,500 extra in debt, leaving me with almost $30,000 in loans when I graduate. I am already worried about my ability pay my loans back, adding several more thousand puts me further behind!”
Samantha Durdock, a sophomore at University of Maryland College Park, currently has $8,000 in subsidized Stafford loans and expects to borrow another $15,000. “Even though graduation is several years away, I am worried about the amount of debt I will have. I might not go to grad school as I have planned, to avoid more debt. If interest rates double, the extra debt might also impact my ability to pay basic expenses like rent.”
Subsidized Stafford loans are provided to almost 8 million low and moderate-income students each year and do not accumulate interest while the borrower is in school. If Congress does nothing, this July 1st interest rates on these loans will double from 3.4% to 6.8% on new loans.
US Senator Reed (D-RI) and Representative Courtney (D-CT), authors of legislation to prevent interest rates from doubling, addressed a large group of students before the letters were delivered. US PIRG with Rebuild the Dream, Campus Progress and the United States Student Association delivered 130,000 letters from student borrowers to House Speaker Boehner, House minority leader Pelosi, Senate Leader Reid and Senate minority leader McConnell.
Lawmakers can support the effort to keep interest rates from doubling by passing H.R. 3826, sponsored by Rep. Courtney, or S. 2051, sponsored by Senator Reed. President Obama has proposed a 1-year freeze on interest rates in his budget request to Congress, a step in the right direction to make interest rates on student loans more responsive to trends in the economy.