Letter to the editor: Keeping student loan interest rates low
Published: Friday, May 11, 2012
Updated: Friday, May 11, 2012 13:05
College students in Vermont and across the nation are facing extraordinary challenges. The costs of higher education have increased significantly. Your college education is costing you three to four times as much as students paid for their degrees a generation ago. Meanwhile, tragically, your job prospects, in the deepest economic crisis since the Great Depression, are not as solid as the prospects of earlier generation of students.
I do not think I have to tell you that we are facing a student loan debt crisis. Student loan debt now exceeds credit card debt, with a total of over $1 trillion in outstanding education debt in our country. I believe that it is essential, under the current difficult circumstances, that we keep student loan interest rates low.
Two-thirds of recent college graduates in Vermont have student loan debt — on average, more than $28,000 worth. And over 19,000 current college students in Vermont receive Stafford loans subsidized by the federal government.
Nationally, the total number of students affected by subsidized Stafford loan interest rates is over 9 million.These are loans targeted at students who are from working families — students who need some public assistance to be able to pay for college.
Maintaining and protecting lower interest rates on student loans can make your college education more affordable. To give these financial benefits to students, who are increasingly dependent on loans to finance their college education, Congress reduced the interest rate on subsidized Stafford loans in 2007.
But if Congress does nothing in the next two months, interest rates on subsidized Stafford loans are set to double from 3.4 percent to 6.8 percent on July 1. This will drive up the cost of college by on average $1,000 in extra debt for students who take out these loans.
It is not as if the cost of borrowing money for other purposes than education is high. Banks borrowing from the government will be paying almost zero interest through late 2014. Given the challenges that college students today are facing, the least our nation can do is keep student loan interest rates at the 3.4 percent.
That is why I am a cosponsor of the Stop the Student Loan Rate Hike Act of 2012. Unfortunately, Republicans in the Senate have been blocking this legislation. While both Democrats and Republicans say that they support keeping the student loan interest rate at 3.4 percent, Republicans want to use the extension of moderate interest rates not to help students, but to advance their ideological political agenda.
Democrats will pay for the loan subsidy by eliminating a loophole that benefits wealthy tax dodgers. Republicans would take billions of dollars from programs that fight preventable diseases, including diabetes, cancer, and heart disease. I do not think we should be pitting access to higher education against public health. I do not think we should hold student loans hostage to the Republicans’ right wing agenda.
It is essential that we keep subsidized Stafford loans at reduced interest rates for the 2012-2013 school year. This is no time be playing politics.
In my view, cutting health care when we have the option of closing a tax loophole that only affects people earning over $200,000 per year makes no sense.
Supporting college education for young people must be a goal in its own right, not a political battlefield where the aim is to win a narrow partisan victory. We must insist that we keep our eyes on the goal of supporting today’s generation of college students.
Senator Bernie Sanders