U.S. Senator Barbara A. Mikulski (D-Md.) today announced that she has cosponsored the Student Loan Affordability Act of 2013, legislation that would prevent federal student loan interest rates from doubling for more than 105,000 Maryland students on July 1st.
"I believe in America's opportunity ladder, and higher education is an important rung on that ladder," Senator Mikulski said. "It's time for Congress to act to help middle class families that are being squeezed by rising tuition. This fully paid-for bill will help keep the American dream alive for students across Maryland and the nation and ensure that when they graduate, their first mortgage isn't their student debt."
This legislation will keep interest rates on federal Stafford student loans from doubling from 3.4 percent to 6.8 percent, an increase of $1,000, for more than seven million undergraduate students. As the cost of a college education continues to rise, this bill helps middle class families that struggle to afford college.
The Student Loan Affordability Act of 2013 would freeze need-based student loan interest rates for two years while Congress works on a long-term solution to slow the rapid accumulation of student-loan debt, and is fully paid for by closing three egregious tax loopholes. Specifically, the bill would: limit the use of tax-deferred retirement accounts as a complicated estate planning tool; close a corporate offshore tax loophole by restricting "earnings stripping" by expatriated entities; and close an oil and gas industry tax loophole by treating oil from tar sands the same as other petroleum products.
The rising tide of total student debt, which has crested above $1 trillion for the first time in our nation's history, has passed credit cards and auto loans to become the second-largest type of consumer debt behind mortgages. Research by FICO Labs found that in 2005 the average student loan debt was just over $17,000. In 2012 it rose above $27,250 -- a 58 percent increase in just seven years.
The ballooning student debt rate is creating a drag on the U.S. economy. As student loan debt has risen, home ownership and car ownership have declined for young households. Keeping the cost of borrowing low will help reduce the amount students owe and help give them purchasing power that can improve our overall economy.
In addition to Senator Mikulski, the legislation, introduced by Senators Jack Reed (D-R.I.) and Tom Harkin (D-Iowa) is cosponsored by Senators Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Dick Durbin (D-Ill.), Al Franken (D-Minn.), Kirsten Gillibrand (D-N.Y.), Martin Heinrich (D-N.M.), Tim Johnson (D-S.D.), Tim Kaine (D-Va.), Amy Klobuchar (D-Minn.), Frank Lautenberg (D-N.J.), Claire McCaskill (D-Mo.), Jeff Merkley (D-Ore.), Chris Murphy (D-Conn.), Patty Murray (D-Wash.), Harry Reid (D-Nev.), Jay Rockefeller (D-W.Va.), Brian Schatz (D-Hawaii), Chuck Schumer (D-N.Y.), Debbie Stabenow (D-Mich.), Tom Udall (D-N.M.), Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.).