Monday, January 30, 2012
Reed Unveils Plan to Prevent Student Loan Rate Hike
WASHINGTON, DC – In an effort to ease the financial burden on families struggling to pay for college, U.S. Senator Jack Reed (D-RI) will introduce legislation tomorrow to prevent interest rates on certain student loans from doubling this year. The current interest rate for a federally subsidized Stafford Loan is 3.4%, but that rate will double to 6.8% on July 1, 2012 unless Congress takes action. That increase could mean an increase of up to $5,200 over a 10-year repayment period for borrowers who rely most on federal student loans.
“A college education is an important investment for both individuals and America’s global competitiveness. It is in our national interest to try and keep student loan rates low,” said Reed. “As the price of college continues to increase, more students are forced to take out bigger loans to pay for their education. Congress has a July 1st deadline to pass this legislation and help millions of students pay for college and save on their interest payments.”
In 2007, Senator Reed helped pass the College Cost Reduction and Access Act, which phased in a lower interest rate on new subsidized Stafford loans to undergraduate students, reducing the rate in half over four years from 6.8 percent to 3.4 percent.
Reed’s legislation, which is identical to a bill introduced in the U.S. House of Representatives by Congressman Joe Courtney (D-CT), would permanently cap Stafford student loan interest rates at 3.4 percent.
“Making student loans more affordable will help families save and expand employment opportunities for more college graduates. Student loans should be an investment that pays off, and can be reasonably paid off,” said Reed. “Congress needs to prevent this rate hike to help keep millions of Americans from being crushed by student debt.”
Rhode Island college graduates have the ninth highest student debt total in the nation, according to a recent study. The Project on Student Debt found that in Rhode Island, 67 percent of students graduating from four-year colleges and universities in the 2010 school year had debt averaging over $26,300.
“This should not be a partisan issue. Business leaders know how vital it is for young Americans to get an education beyond high school. This bill help kids get the post-high school education and training they need. Failing to pass it will make it harder for smart, hard-working Americans to join the middle class,” concluded Reed.