In a report, the Federal Reserve Bank of New York said student loan debt has surpassed the nation’s credit card debt, fueling a nationwide debate on keeping college affordable.
Congress scrambles to resolve increasing student loan debt
Adding to the increasing levels of student loan debt in the United States is the possibility of having federal, or subsidized, Stafford Loan interest rates double from 3.4 percent to 6.8 percent on July 1.
Congressman Joe Courtney, D-Conn., introduced House Bill 3826 (H.R. 3826) on January 25. The bill potentially caps federal student loan interest rates by the July 1 expiration of the 2007 legislation that capped student interest rates for five years.
According to the Stafford Loan website, federal Stafford Loans are one of the most common and inexpensive ways to pay for tuition.
Congressman Gary Peters, D-Mich., the first co-signer of H.R. 3826, is working with Courtney on lowering interest rates.
“He thinks college education is key to helping our country survive,” said Vicki Christner, Deputy Press Secretary for Congressman Peters. “We have the most educated workforce in the country, and if college becomes unaffordable, then we won’t be able to sustain that.”
Christner said the bill now has over 150 co-sponsors. On Tuesday, Peters held a press conference at Wayne State University’s Farmington Hills campus in Michigan about lowering student loan interest rates. Three students — an upcoming graduate, a current student and a prospective student — explained the effects of increasing loan interest rates, and financial aid advisors and local community leaders spoke about the importance of keeping interest rates down.
“We don’t want to burden students more than they need to be,” Christner said.
Josh Zembik, communications director for Congressman Courtney, said H.R. 3826 is currently in the hands of the committee.
“What we’re looking at right now is competing proposals, including one that was voted on by the full House last Friday,” Zembik said. “The fixes we see being proposed, the ones being voted on, are one-year fixes.”
The bill voted on by the House was a Republican bill that called for a one-year fix.
“The money that is used for preventative care, instead of being used toward health care, would then be used for education,” Christner said. “[Congressman Peters] doesn’t believe you should pit education against public health.”
Christner said since the bill passed the House, it is now being looked over by the Senate. She said President Obama would veto the Republican bill if it passed.
Zembik said Courtney’s bill is the only bill that is bipartisan with a plan for a long-term permanent fix to the rate. He said Courtney is also a co-sponsor of another bill that is a one-year fix offered by Democrats.
“The pressure is big,” Zembik said. “Congressman Courtney is committed to seeing this rate not double. He’s been on the floor talking about this, and enlisting colleagues to support this bill and talk about it nationally.”
In addition, Zembik said 130,000 letters from college students were delivered to House and Senate leaders encouraging action.
“We’ve got data from nonpartisan outside groups that show that [an increase can] over the course of a 10-year repayment plan, cost students up to $5,000 more, and over a 20-year repayment plan, cost $11,000 more,” he said. “We’re talking about a situation where people are graduating with $80,000 in debt already; with another $11,000, it’s huge.”
The UC Davis Financial Aid Office also expressed its concern over rising student loan interest rates.
“Hopefully, they extend the time for the interest rate to be lowered,” said Joyce Cleaver, data analyst for the UC Davis Financial Aid Office. “That would be fabulous.”
CLAIRE TAN can be reached at firstname.lastname@example.org.