Congressman Joe Courtney today introduced legislation to ensure that interest rates on subsidized Stafford student loans for undergraduate students do not dramatically increase this year, locking in the lower rate until July 1, 2015. At introduction, the bill has more than 60 cosponsors.
In 2007, Congress made an historic investment in higher education when it passed the College Cost Reduction and Access Act. The legislation includes a provision that reduced the fixed rate on Stafford student loans for undergraduate students. The College Cost Reduction and Access Act lowered subsidized Stafford student loan rates from 6.8 percent to 3.4 percent over a four-year period, easing the burden on thousands of students and their families.
Congressman Courtney led the effort in the House in 2012 to lock in the lower rate for an additional year. However, without Congressional action, these rates will double on July 1, 2013--costing students and families thousands of dollars over time. Courtney's bill would eliminate the existing sunset, and ensure that rates remain at 3.4 percent for two more years while Congress works on a long-term solution to slow the rapid accumulation of student-loan debt.
"A college education is key to success in today's economy, but for many students, the spiraling costs of higher education are creating an immense barrier and impacting real-life decisions like when to get married or whether to buy a house," said Congressman Courtney. "Last year, with a tremendous push from students across the country, we successfully postponed the interest rate from increasing. Unfortunately, we are again staring down a July 1 deadline to act. This legislation will not only defuse the ticking time bomb and provide certainty for two years, but it will also provide the Congress with time to craft a thoughtful long-term solution to address this growing problem that is weighing down young people as they enter the workforce."
According to the non-partisan U. S. PIRG, if Congress does nothing, borrowers who will take out the maximum $23,000 in subsidized student loans will see their interest balloon to an additional $5,200 over a 10-year repayment period and $11,300 over a 20-year repayment period.