Today, Reps. Steve Israel (D-NY) and Grace Meng (D-NY) called on Congress to take action to prevent student loan interest rates from doubling. If no action is taken, the fixed interest rate on subsidized Stafford loans will double from 3.4 percent to 6.8 percent on July 1st, making it harder for students and middle-class families to afford higher education.
Rep. Israel said, "An affordable and quality college education should be readily available, but too many students today are facing crippling student loan debt. If nothing is done, millions of students and families will face higher student interest rates that they simply can't afford. Rep. Meng and I are urging Congress to take action to keep interest rates from doubling before the July 1 deadline."
Rep. Meng said, "Our students are the future of America. Ensuring that they have access to an affordable college education is essential for them to succeed in today's competitive job market, and it's critical for the future health and prosperity of our nation. Make no mistake, students from New York and across the nation will be hit hard if Congress fails to prevent interest rates from doubling. Balancing the federal budget is crucial. But it should not be done on the backs of our students."
Grace Segers of Melville, who will be entering Tufts University as a freshman next year, also spoke. She said, "As a rising college freshman, I am aware of how the debt I accumulate in the next four years will affect my future. This is why it's so important that Congress take action to keep student loan interest rates as low as possible. I thank Reps. Israel and Meng for their efforts on behalf of students like me."
Gabriel Yoon of Maspeth, Queens, who will be entering his sophomore year at SUNY Maritime and is majoring in electrical engineering, spoke as well. "Ensuring that higher education is affordable is critical to me and millions of other students and their families. I urge Congress to not let America's college students down, and I thank Reps. Meng and Israel for urging Congress to act," he said.
In 2007, Congressional Democrats passed and President Bush signed the College Cost Reduction and Access Act, which lowered rates on need-based Stafford loans gradually over a four-year period, decreasing the interest rate from 6.8 percent to 3.4 percent through the 2011-12 academic year. In 2012, Congress extended this reduced rate for a year, which is set to expire on July 1st.
Reps. Israel and Meng are cosponsors of the Student Loan Relief Act of 2013 (H.R. 1595) to extend the reduced interest rate for two years. The goal of a two-year extension is to provide Congress with the time to rethink student loan interest rates and debate the best policy as part of a larger higher education reauthorization bill.
Currently, outstanding student debt (for all borrowers) is over $1 trillion. Two-thirds of the Class of 2010 graduated with student loan debt, and these graduates left school with an average of $25,000 of student loan debt and entered an economy in which young Americans have the highest unemployment rate of any other group. Unlike Pell Grants, which provide a vital benefit to lower-income families and students, subsidized Stafford students loans benefit many middle-class families who are being squeezed by rising costs everywhere.
If the student loan interest rate doubles, more than 7 million students' and families' ability to pay for another year of college would be impacted. It has been estimated that for each year Congress does not act on reducing the student loan interest rates, the neediest students will see their costs increase by more than $1,000 through repayment.