Hoping for a federal student loan to help pay for college?
Beware, because the interest rates are set to double on July 1,
unless Congress and the White House find a way to avoid what could be
another looming political standoff.
In 2007, President George W. Bush signed a bill that cut in half
interest rates on subsidized student loans until 2012. Those low rates
will expire on July 1, going back to 6.8 percent from 3.4 percent, and, to prevent college from becoming even more unaffordable for
millions of students, the obvious move is to renew them.
The White House is pushing for an extension of the current interest
rate of 3.4 percent. Without it, the rate will climb to 6.8 percent for
more than 7 million students across the country, and the average loan
recipient would be an additional $1,000 in debt, according to White
House spokesman Matt Lehrich.
“Let's tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.” – President Barack Obama, January 27, 2010
In his weekly YouTube address – posted to the official White House
channel Saturday – President Obama sternly warned Congress to take
action and prevent interest rates for a popular federally subsidized
college loan program from doubling this summer.
Students are already struggling to keep up with
rising tuition and living expenses and, if anything, the government
should be working to make college more accessible to high school
graduates.
As we work to get the economy back on track, no one is suggesting it
would be a good idea to double interest rates on credit cards or home
mortgages. Why then do some believe it's a good idea to double interest
rates for students?
Cecilia Muñoz, White House domestic policy director, said Monday in a
conference call with reporters: "We must keep rates low so more Americans get a fair shot, a more affordable education and a clear 'path to the middle class.' "
"Given the bleak job prospects that young Americans coming out of
college face today, I encourage Congress to temporarily extend the
current low rate on subsidized undergraduate Stafford loans," Romney
said. "I also hope the president and Congress can pass the extension
responsibly, that offsets its cost in a way that doesn't harm the job
prospects of young Americans."
Although college certainly isn’t for everyone, rising costs and
interest rates will dissuade many who would otherwise consider pursuing a
college education. This will contribute to the erosion of the middle class and increase
the strain on public assistance programs that are already struggling to
deal with across-the-board budget cuts.
Now Congress has an important decision to make. Do they double interest
rates for Stafford loans, or they keep interest rates where they are? This is not about politics.
It's about doing right for America's students - and for our nation's
economy.
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