Student Loan Interest Rates Set to Double July 1; One UMD Student’s Perspective
By Taahira Thompson, a Summer 2013 Leadership Conference Education Fund Intern
On Thursday, June 5, Student Debt Day, students came together to bring attention to the student debt crisis, both in person and on Twitter using #DontDoubleMyRate. The Campus Progress event sent students to lobby senators on Capitol Hill to take action and keep Stafford loan interest rates from doubling. It was an amazing opportunity to meet with other interns and students around the city. The Student Loan Affordability Act was certainly something that everyone could come together on. Nearly all the participants had some sort of personal connection to the issue, whether it was directly or through a friend.
On July 1, 2013 the interest rates on these essential loans are scheduled to double. If Congress does not act, millions of students across the country will see a 6.8 percent interest rate on the loans they accept for college in the fall. This significantly raises the already high cost of a college degree and weighs them down with an even heavier load of debt, as this twitter pic from Rep. Nancy Pelosi depicts.
Meeting with the different senators and staffers on the hill was an excellent way to see how laws get passed. Bills gain traction because lots of people spend hours working to make sure the voices and stories of lawmakers’ constituents are heard. It was definitely an eye opening experience and any intern should jump at opportunities like this. Check out this video from another Leadership Conference intern on his experience at Student Debt Day last year:
Student debt has become an increasingly alarming problem in the United States. Young people across the country have been taking strides to make a better life for themselves and their families by going to college. Unfortunately, the ever growing cost of higher education is making it much harder to do. The average amount of debt taken on a by a student in the United States is $26,000.
National student debt has reached 1.1 trillion dollars, surpassing auto loans, credit card and home equity debt. In an effort to limit the amount the debt they take on, many students and their families rely on federally subsidized Stafford loans. These loans have a 3.4 percent interest rate and over seven million students rely on them to make paying for college feasible for themselves and their families.
In an attempt to get a handle on the student debt crisis, several politicians have put forth plans for student loan reform. Two different proposals, one by Senator Elizabeth Warren, D. Mass., and the other by Senator Sherrod Brown, D. OH, would be most beneficial to students. Senator Warren’s bill would allow students to borrow money from the federal government at the same interest rates that banks do. This would effectively lower interest rates from highs of 6.8 percent to 0.75 percent, saving students thousands of dollars.
While Sen. Warren works to help future lenders, Sen. Brown seeks to aid past lenders. He is working on legislation that would allow past borrowers to refinance their private loans and make them more affordable. His proposal would lighten the burden on past and future students, making them better able to invest in big ticket items like homes and cars that would stimulate the economy.