Congresswoman Allyson Schwartz (D-PA) recently joined Congressman Joe Courtney (D-CT) in introducing legislation (H.R. 1433) to prevent a sharp increase in interest rates on subsidized federal Stafford loans for undergraduate students. These rates are scheduled to double on July 1, and the bill would lock in the lower rate until July 1, 2015.
In 2007, Congresswoman Schwartz supported the College Cost Reduction and Access Act, which reduced subsidized Stafford student loan rates from 6.8 percent to 3.4 percent over a four-year period, easing the burden on thousands of students and their families. She then helped lead the successful effort in 2012 to extend the lower rate for an additional year. But unless Congress acts soon, these rates will double on July 1, 2013, causing almost 400,000 Pennsylvania student borrowers to take on an average of $1,000 in additional debt. We cannot let this happen. That is why Congresswoman Schwartz is fighting to pass new legislation to keep these rates at 3.4 percent for two more years. This will help students and their families and give Congress time to find a long-term solution.
"Without question, our nation's economic future depends on ensuring that a college education is not out of reach for any American due solely to the cost," Congresswoman Schwartz said. "I understand the concerns Pennsylvania's students and families are grappling with, especially when it comes to affording higher education. One of my top priorities in Congress is expanding access to college. Maintaining the lower Stafford loan interest rate will provide real relief to student borrowers and their families."
Unless Congress acts, borrowers who take out the maximum $23,000 in subsidized student loans will see their interest swell to an additional $5,200 over a 10-year repayment period and $11,300 over a 20-year repayment period, according to U. S. PIRG.
"A college education is key to success in today's economy, but for many students, the spiraling costs of higher education are creating an immense barrier and impacting real-life decisions like when to get married or whether to buy a house," said Congressman Courtney. "Last year, with a tremendous push from students across the country, we successfully postponed the interest rate from increasing. Unfortunately, we are again staring down a July 1 deadline to act. This legislation will not only defuse the ticking time bomb and provide certainty for two years, but it will also provide the Congress with time to craft a thoughtful long-term solution to address this growing problem that is weighing down young people as they enter the workforce."