If you were able to graduate from college without taking out student loans, consider yourself very lucky. About 60% of students graduate from college having taken out loans, meaning that right now, there are about 37 million Americans with outstanding student loans. With a federal average of $27,000 graduating debt, many Americans are looking at years – decades – of paying off their loans, which means that interest rates matter. So we should all be concerned that interest rates on federally subsidized student loans are about to double.
If Congress doesn’t take action before the July 1st deadline, Stafford Loan interest rates will rise from 3.4% to 6.8%, leaving many graduating college students with higher monthly payments over the course of their loan.
Higher loan payments mean less financial freedom for millions of Americans. It makes it harder to make car payments, pay off credit cards, and to participate fully in the economy. Supporting the economic recovery by purchasing a house, or buying necessities, or going back to school is made impossible when we are dealing with staggering loan payments.
Luckily, there is great political will to address this problem – it’ll just be a matter of agreeing on how. Several proposals have been made by both parties, including one that lowers the rate to 0.75% for one year. The plan garnering the most support now allows the interest rate to fluctuate with the market, though it would be capped at 6.8%. This plan is co-sponsored by both of our U.S. Senators, and the House version has the support of many of our U.S. Representatives.
There are many more questions to be answered. Will the rate be fixed, or fluctuate over the life of the loan? Should the government have more influence over the rate fluctuation? It is encouraging to see both sides of the aisle interested in addressing the ever-growing problem of student debt.
We thank our Minnesota Delegation for their leadership on this critical issue. Call your Congressmen today and thank them for supporting students and graduates in Minnesota and making a higher education a more realistic possibility for millions
Erin Hocking, Metro Campus Organizer