U.S. Rep. Diana DeGette (CO-1) today joined local Colorado students and the Colorado Public Interest Research Group (CoPIRG) to call for Congressional Leadership to take urgent action to prevent the doubling of student loan interest rates on July 1st. If Congress doesn't act, when interest rates double to 6.8 percent on July 1st more than 7 million students -- including 167,000 in Colorado -- will pay more in repayment costs for the 2012--2013 academic school year. Speaking at Community College of Denver (CCD), DeGette and others highlighted the effects the impending rise in interest rates would have on students and families who must borrow to attend college, and on our long-term economy.
"To compete in the global economy of the 21st century, the United States must do everything possible to help our students achieve an education that prepares them for success," said DeGette. "But unless Congress acts, in only 2 months, interest rates on need-based student loans will double from 3.4 percent to 6.8 percent. That means that nearly 167,000 right here in Colorado will have to pay an additional $1,000 over the life of their loan. Why, when we know the value of a college education to both students and to our economy, would we put up more hurdles for students to obtain that education?"
"The cost of the rates doubling means $160 million more in debt for Colorado's students," said Danny Katz of CoPIRG. "Student loans are already a ball and chain that students drag for years -- affecting where graduates live, the kinds of careers they pursue, whether they try to start a new business, when they start a family or purchase a home, and when they can start to save for retirement. Inaction before July 1st will add nearly $1,000 to that ball and chain. President Obama travelled to Boulder last week to call for action and even Governor Romney signaled his support soon after. This should demonstrate to Congressional Leadership that this is a common sense, non-partisan proposal."
Through the College Cost Reduction and Access Act of 2007, Congress made historic investments in student aid. The law halved interest rates on need-based federal student loans to 3.4 percent-- making these loans more affordable for low- and middle-income students. If Congress doesn't act before July, the rate will jump back up making it much more difficult for many American students and their families to afford a college education.
With the recent economic stressors, more and more students and families are turning to federal student loans to finance a degree or even to go back to school to improve their skills in a changing workforce. That means that in Colorado, 55% of the state's graduates carry student loan debt, with an average of $22,017 per borrower. And while right now, Colorado's unemployment rate is below the national average, our state still experiences a skills gap -- that may only get worse if college is not affordable for more students. It is estimated that by 2020, 70 percent of the jobs in the state will require a certificate or college degree, with only 41 percent of the population having one.