By Jeremy Blackman
U.S. Sen. Jeanne Shaheen told a crowd at Granite State College yesterday that the need has perhaps never been greater to make higher education affordable for Americans from all walks of life.
Speaking at a roundtable discussion two weeks before interest rates on federal student loans are set to double, the Democrat warned that inaction in Washington will prevent thousands of Granite State students from graduating.
"By 2018, New Hampshire is going to need 43,000 graduates in the STEM subjects, so how are we going to get all those young people we need in those fields?" she asked, referring to the fields of science, technology, engineering and mathematics. "We've got to make sure they have access to higher education."
If Congress fails to act, the interest rate on subsidized Stafford loans for future students will double from 3.4 percent to 6.8 percent -- equal to the current unsubsidized rate.
Subsidized loans are granted to students with designated financial need, and the interest on them is paid off by the government until the student graduates; unsubsidized loans are not limited to low-income students but interest on them is not covered by the government. The new rates would only apply to future students who take out loans.
Student debt has ballooned to more than $1 trillion nationally, and it has become a major policy dispute in Washington. In May, the House passed a Republican-led bill that would overhaul the entire loan structure, pegging rates to market trends, meaning they would fluctuate over time rather than stay fixed as they are now. The Obama Administration, citing opposition to setting a fluid rate, has threatened to veto the measure.
The Senate, meanwhile, has failed to pass both Republican- and a Democrat-sponsored bills. The Republican bill would tie Stafford loans and PLUS loans, another type of federal assistance, to the 10-year U.S. Treasury rate, and would have left them fixed; while the Democratic measure, supported by President Obama (though he has also outlined goals that align in ways with the Senate Republican bill), would have extended the current 3.4 percent rate for two years.
New Hampshire has a big stake in the debate because its students in 2011 had the highest average student debt load in the country, at $32,440, according to a report released last fall from the Institute for College Access and Success.
"That's an issue I think affects us all, not only for our students," said Granite State President Todd Leach. "It's also an issue for our workforce, its an issue for our economy -- there are graduate students paying off student loans rather than spending money in New Hampshire."
Shaheen, who voted for the Democratic Senate bill and against its Republican counterpart, warned yesterday that the looming rate hike would have a "critical impact" on students. She described the debt debate as one about whether students from all socio-economic backgrounds have access to higher education.
"But it's really a bigger issue," she said. "And that is whether we're going to have the skilled workforce we need not only to compete with the rest of the country, as the state of New Hampshire, but really with the rest of the world."
Sen. Kelly Ayotte, a Republican, voted for her party's Senate bill, and said yesterday in an email that she believes "Congress and the president will find common ground to reach an agreement before July 1."
"I want a solution that provides students and families with the certainty they need to plan for their educational financing while simultaneously protecting taxpayers," she said.
If an agreement isn't reached, some local college aid officers worry there could be unintended consequences, such as students taking more private loans, which may have attractive interest rates but do not have the same benefits as federal aid, including an income-based repayment program and potential loan forgiveness after a set number of years.
"We are very fearful that these families are going to say no to these unsubsidized loans that are already at 6.8 and they're going to jump over to the private loans that have wonderful rates right now, and they're fixed -- however they have none of the benefits," said June Schlabach, director of financial aid at Plymouth State University.
Shaheen told the crowd of about 40 people that inaction will lead to both fewer students gaining access to college and fewer students completing their education once they arrive on campus. And that's unfortunate, she suggested, because having an education is as important as it has ever been.
"Over the years since the recession there have been some questions raised about whether the cost of higher education is worth it," she said. "For anybody who has any doubts about is that degree worth it, the answer is absolutely."