American Students Protest Raising of Student Loan Interest Rates
America’s college students are urging lawmakers to take action to stop the raising of interest rates for subsidized federal student loans. With just three months left until rates are scheduled to double to 6.8 percent, a gathering of students marched on Capitol Hill on Tuesday, pushing for lawmakers to repeal the move. In addition, the consumer advocacy group US Public Interest Research Group delivered a petition with 130,000 student signatures to Congress pushing for the change.
Nearly 8 million students use subsidized student loans to pay for higher education, the majority of them from low to middle-income families. Without action being taken, students receiving the maximum of $23,000 will have to pay an extra $5,000 over the course of the standard 10-year repayment period, which starts 6 months after students quit attending school.
Prior to 2007, subsidized student loans did carry an interest rate of 6.8 percent, but House Democrats enacted gradual reductions in the rate when they took control of the House in that year’s elections, with the rate falling to 3.4 percent in the last school season. Those reductions are scheduled to expire in July, and the rate would revert back to 6.8 percent for the 2012-13 school year.
With the economy struggling to recover, student loans are a major source of Americans’ debt. Student loan debt, in fact, totals $870 billion, according to data from the New York Federal Reserve, well ahead of the $693 billion in credit card debt and $730 billion in car loan debt. And, with unemployment near 24 percent for teenagers and 14 percent for Americans aged 20 to 24, more and more young Americans are deciding to pursue degrees, seeking financial assistance to make it happen. Additionally, students are struggling to pay back those loans, as Equifax reported the number of students behind by three months or more on repayment plans rose 14.6 percent last year.
President Obama also asked Congress to stop the rate hike, during his State of the Union Address last week. But Congress has yet to act, even though several bills have been drawn up that would prevent the action. And with Congress under pressure to reduce the national deficit, the $5.6 billion per year the rate hike would create will make it difficult to get any action passed, anyway.
