Congresswoman Nita Lowey (D-Westchester/Rockland), the senior Democrat on the House Appropriations Committee, today called on Congress to immediately act to prevent interest rates on federal student loans from doubling on July 1st.
Unless Congress passes legislation in the next five weeks, interest rates on Stafford loans, the most popular type of federal student loans, will increase from 3.4% to 6.8% for students who apply for aid for the 2013-2014 school year. More than 20,000 college students in New York's 17th District currently rely on federal Stafford loans.
"If Congress sits on its hands, allowing the interest rates on these popular federal loans to double, it will cost students and cost our economy," said Congresswoman Lowey. "That is why I am calling for the immediate passage of legislation to prevent these rates from doubling. We must do all we can to help keep an affordable college education within reach."
"Last year, more than 4,600 Pace students and their families borrowed low-interest federal loans to help realize their dreams of a college education. These are outstanding young Americans who are preparing to contribute to their industries, communities, and the progress of the nation," said Pace University President Stephen J. Friedman. "At a time in America when the employment prospects of young people are so clearly linked to college graduation, and when employers are lobbying for looser visa rules because they cannot find enough highly educated Americans, the national interest is ill-served by any step that will encourage students to drop out of college or turn away from going to college all together. I am proud to join Congresswoman Lowey in this effort and urge Congress to act before the July 1 deadline."
Congresswoman Lowey's call for Congress to act comes as the current across-the-board federal budget cuts known as sequestration are reducing federal aid for students. While Pell Grants are exempt from reductions, other federal college affordability services, such as Supplemental Education Opportunity Grants and Federal Work Study assistance, are being reduced. A report issued earlier this year by Congresswoman Lowey found that students at local colleges and universities will lose more than $224,000 in tuition assistance this school year under sequestration. The full report can viewed here.
"With the senseless across-the-board federal budget cuts, doubling the interest rates students pay to finance their education would add insult to injury," added Congresswoman Lowey.
Congresswoman Lowey has cosponsored two pieces of legislation that would prevent interest rates on federal student loans from rising. One bill would lock in place the current interest rate of 3.4%. Lowey has also cosponsored legislation that would allow students to obtain federal loans at the same rates the Federal Reserve provides to banks, which can be as low as 0.75%.
As the senior Democrat on the House Appropriations Committee, Congresswoman Lowey has fought to increase the maximum Pell Grant award. A total of 21,108 students at colleges and universities in Westchester and Rockland annually receive Pell grants worth up to $5,500.