Student loan rates to double on Monday as Congress heads home
With student loan rates scheduled to double from 3.4 percent to 6.8 percent on Monday, Congress is about to leave town for the July 4 recess without taking action.
“We urge Congress to put students before politics and put aside partisan bickering,” said National Education Association President Dennis Van Roekel. “Our students are our country’s future, and we should not bankrupt them.”
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.
According to a report released this week by the Urban Institute, 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, race and ethnicity.
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 is unacceptable, Van Roekel said.
“We are not entirely opposed to a variable student loan interest rate,” Van Roekel said, “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.”
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