Student Loan Rates to Double on Monday as Congress Heads Home
By Tim Walker and Miguel Gonzalez
With student loan rates scheduled to double from 3.4 percent to 6.8 percent on July 1, Congress is getting ready to leave town for the July 4 recess without taking action. Senators have introduced a one-year extension of the current interest rates in order to allow enough time to work out long-term solution.
““We urge Congress to put students before politics and put aside partisan bickering. Our students are our country’s future, and we should not bankrupt them,” said National Education Association President Dennis Van Roekel.
Some 60 percent of students must borrow to attend college. Total student debt passed the $1 trillion mark last year—already, 35 percent of our nation’s 37 million students are behind on their loan payments, a number that will only grow if interest rates and the cost of borrowing rise. The ripple effects of a heavier debt burden will be felt throughout the U.S. economy, which isn’t yet strong enough to withstand additional reductions in consumer spending or investment. (Read how students and families are being harmed by rising college costs)
According to a report released this week by the Urban Institute, more than half (57 percent) of people with student loans are concerned about being unable to repay them. This concern is far reaching and spans economic and demographic groups, including education level, income, age, and race/ethnicity.
College affordability is extremely important to the 60,000 members of the NEA Student Program, who are currently struggling to pay for their own education. They are also concerned for their future students’ ability to follow their dreams. If the rates double, graduates would face additional pressure and many high school students will to reconsider applying to colleges and universities.
“We all fear for that senior in high school who has decide whether or not to set aside a college acceptance letter based on the skyrocketing costs of higher education,” said NEA Student Program Chair David Tjaden. “Our lawmakers must take steps to ensure that those students have the ability to pursue their career choices and can do so without the burdens and barriers of high student loan interest rates.”
In June, NEA Student Program members convened on Capitol Hill, where they met with the members of Congress, telling their own personal stories, sharing anecdotes from student members across the country, and thanking several for being champions of college affordability.
NEA supports The Keep Student Loans Affordable Act of 2013, sponsored by Sens. Kay Hagan, D-N.C., and Jack Reed, D-R.I., that would extend the 3.4 percent rate for another year, giving lawmakers time to craft a long-term fix. Another bill, proposed by the House of Representatives and some senators, would tie the interest rate to uncapped market rates, plus three percent. This provision, Van Roekel says, is unacceptable.
“We are not entirely opposed to a variable student loan interest rate, but we are very concerned about allowing interest rates to rise without a cap. Plans that claim to raise billions of dollars off of student loans to go towards deficit reduction are misguided. We should avoid at all cost to balance the budget on the backs of America’s students, many of whom are already struggling to afford higher education.”