On Monday, July 1, Congressmen Frank Pallone, Jr. (NJ-06) and Donald Payne, Jr. (NJ-10) called for a solution to the doubling of interest rates for federally backed, need-based loans that went into effect today. The congressmen held a press conference at New Jersey Institute of Technology (NJIT) and condemned House Republican leadership's failure to allow a vote on the Democratic solution to freeze the rates at 3.4 percent. The rate hike affects 7 million students.
"Doubling student loan interest rates has real consequences for young people who are working hard to achieve the American dream. State funding and federal aid has not kept up with the cost of rising tuition, and House Republicans' stubborn refusal to maintain interest rates means an average of $1000 more out of the pockets of the neediest students each year," said Pallone. "It is in the nation's long-term economic interest to minimize student debt and ensure that college is still an attainable goal. House Republicans are keeping students from realizing their dreams and all the opportunities a higher education brings. This should not be a partisan issue. This is common sense, and Congress must act to stop this rate hike immediately."
"In speaking with young people in my district, I find that they are incredibly talented and eager to make it on their own, open their own business, and even continue on to grad school. But because of the steep rise in tuition over the last 30 years and the amount of debt they carry with them on graduation day, young people have to put their dreams on hold, move back in with their parents after graduation, and put more than fifty percent of their salaries toward paying off student loans," said Payne. "We are stunting the growth of a generation of entrepreneurs, innovators, and leaders because some of my colleagues in Washington refuse to compromise. Our economy needs more small business owners, engineers, scientists, and mathematicians to compete in a global economy, and I will continue fighting to make sure that our students are given the chance to succeed."
New Jersey's recent college graduates hold an average of $28,183 in loan debt, which is 61% of their annual income according to a report released this month by the Congressional Joint Economic Committee Democrats.
Last year as well, interest rates were set to double for student loans, until a public outcry compelled the Republican led House to extend the 3.4 percent rate through the 2012 - 2013 academic year.
According to nonpartisan analysis by the Congressional Research Service, the House Republican proposal passed on May 23, 2013 would cost students and families even more in interest payments than the current situation of allowing the rates to double. House Republicans refused to allow a vote on the Democratic proposal, the Student Loan Relief Act, which would freeze current interest rates at 3.4 percent for the next two years.