In just a few weeks, millions of American college students and their families will find the cost of attending college much more expensive. That’s because on July 1, the interest rate on federally subsidized Stafford loans is set to double from 3.4 percent to 6.8 percent. This hike in the interest rate is about to hit more than seven million students, increasing their college costs by approximately $1,000 next year.
Today, millions of college students are already weighed down by overwhelming student loan debt – more than $1 trillion worth. According to the Federal Reserve, about two-thirds of that debt is held by people under 30.
The doubling of the student interest rate on Stafford loans would be a tragedy for many families and one that easily can be avoided. All it takes is members of Congress working together to ensure that the interest rate on student loans does not double. One simple proposal I support would be to change the formula by which employers fund their employees’ pension funds to a more predictable and fairer formula. This change would generate more than enough money to make sure that student loans remain at 3.4 percent.
As we work to restart our economy after the worst economic downturn since the Depression, employers need highly skilled, educated workers who can fill the jobs of the future, jobs that will help our nation prosper in the 21st Century. At the same time, for our economy to recover, we need young Americans who will help stimulate the economy by buying cars, purchasing homes, and starting families.
Making college more affordable – not less — is just common sense. Today, the average college student graduates with $25,000 of debt, an amount that may take years to pay back. Saddling young adults with even more debt will not help jumpstart our economy and it makes little sense to add to their already substantial college debt by allowing the interest rate on student loans to double.
We must stop this increase in student loan interest rates from taking effect. It’s time for us to stand up for the American Dream and for our nation’s future. We cannot allow higher education to become unaffordable for millions of Americans who have the desire and the ability to learn and succeed. I am committed to preserving affordable college education as a long-term investment in our future.
In the 21st Century economy, higher education is not a luxury, it is an economic imperative. Unfortunately, the education that is needed for millions of Americans to succeed is becoming increasingly out of reach for too many people. We cannot add to this burden by allowing the interest rate on student loans to double. It’s time to put partisan differences aside and act now. Our future demands it.