By Matt Huston
Rep. Rush Holt and leaders of local colleges gathered at The College of New Jersey yesterday to make a case for preventing an impending spike in the interest rate on federal student loans, which is set to double on July 1.
"There are only 58 days left to fix this," said Holt (D-Hopewell), who was accompanied by the presidents of TCNJ, Mercer County Community College and Rider University, and Rutgers University's director of financial aid.
Barring congressional action, the interest rate on subsidized Stafford loans issued after July 1 will increase from 3.4 percent to 6.8 percent as a condition of the 2007 legislation that lowered the rate to its current level. The increase would add approximately $1,000 to the debt burden of the average student, according to Obama administration.
The Congressional Budget Office has estimated it would cost about $6 billion to freeze the interest rate for one year.
Holt has co-sponsored legislation that would prevent the rate increase by eliminating tax subsidies for large oil companies. He asserted that the bill would take "just a fraction off the top" of oil profits.
"They made enough profits in just three months to pay for keeping interest rates low for the next five years," Holt said.
The congressman allowed that he is not very confident his bill will succeed in the face of Republican opposition in Congress, but said, "I have higher hopes that a way will be found." He said that he thinks congressional Republicans, who have decisively opposed revenue increases, may be considering "ways to raise revenue without calling it that."
TCNJ President R. Barbara Gitenstein and the other college officials spoke in support of maintaining the lower interest rate.
"The effect of allowing this rate increase to take place should not be underestimated," Gitenstein said. "It will be devastating."
The Stafford loan program is the biggest federal financial aid program in New Jersey, according to Jean McDonald-Rash, director of financial aid at Rutgers.
"For many of our students, the majority of our students, it is the only need-based financial aid program that they have access to," she said.
The rate increase would pose an additional challenge to community college students, many of whom come from limited means and juggle schooling with family responsibilities, MCCC President Patricia Donohue said.
"For them, doubling their interest rate literally may be taking that gas money to get to work or their children's school lunches," she said.
Christina Kopka, incoming student government president at TCNJ, spoke on behalf of student borrowers.
"We look forward to joining the work force, and we look forward to making this world a better place," she said. "However, the challenges of affording college have made it difficult for us to do so. When these energies are focused inward, it's difficult to look outward."
Though federal support of higher education is expensive, raising the interest rate on student loans would amount to "false savings," Holt said, affecting the future success of current and prospective college students.
"We should not be making it harder for students to get a higher education," he said.
Holt invoked past higher education projects, including the GI Bill and the
establishment of community colleges.
"This is the kind of policy that advances the country," he said.