U.S. Rep. Mike Thompson (CA-5) announced today that he has introduced H.R. 1433, the Student Loan Relief Act. The legislation will ensure that interest rates on subsidized Stafford student loans for undergraduate students do not dramatically increase on July 1st of this year. Without congressional action, rates are set to double from 3.4 percent to 6.8 percent.
"The one essential element to our nation's long-term economic success is education," said Thompson. "If our nation is going to continue producing the world's best entrepreneurs and innovators, then a college education must be an affordable option for working families. This bill is one important step of many that Congress must take to lower to cost of high-education."
In 2007, Thompson voted to pass the College Cost Reduction and Access Act which made historic investments in student aid. The College Cost Reduction and Access Act lowered need-based 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.
With the lower rate set to expire last year, Thompson helped lead the effort in the 112th Congress to ensure a one-year continuation of the current interest rate. Congress passed legislation extending the lower interest rate though July 1st, 2013.
Now, without congressional action, interest rates on subsidized Stafford student loans for undergraduate students will double from 3.4 percent to 6.8 percent on July 1st of this year. The bill co-authored by Thompson would extend the 3.4 percent rate for two years to July 1st, 2015, making student loans more affordable for low- and middle-income students.
If Congress doesn't act, more than 7 million students will incur an additional $6.3 billion in repayment costs for the academic school year. That means college next year, and every additional year Congress doesn't act, gets $1,000 more expensive for each student borrower.