By Cassandra Lans
This week Congresswoman Gwen Moore (WI-4) joined Milwaukee Area Technical College (MATC) students to oppose doubling the subsidized Stafford student loan interest rate from 3.4 to 6.8 percent. If Congress fails to act, the rate will automatically double on July 1.
“In our recovering economy, it is absurd that we are even debating whether or not to keep student loan interest rates low,” said Rep. Moore. “Student loan debt has reached over $1 trillion, impacting more than 7 million students. We must come together before July 1 to support our students, not double their burden.”
If Congress does not act to maintain the current rate. Student debt in total stands at surpassing auto loan, credit card and home equity debt.
”This year and every year Congress doesn’t act, student borrowers face a thousand dollars more in debt,” she said. “Failure to act now will add $4.3 billion to students’ debt burden for next year’s loans.” Moore said.
Last week, the Senate killed two plans to head off the rise in student loan interest rates. Democrats wanted a two-year extension of the rates while lawmakers come up with an overhaul of the student loan process. Republicans wanted to link interest rates to economic conditions, adjusting interest each year with rates based on the 10- year Treasury note. Senator Elizabeth Warren (D-Mass) slammed Republicans for blocking the bill that would give Americans relief on their student loan debt. She said, “There are strong proposals on the table that would keep interest rates low while Congress has time to work out a permanent solution. And yet, Congress fails to act. Why? Two issues: money and values.
First, money. Some have argued that we can’t afford to keep interest rates low. But let’s be clear: Right now the federal government is making a profit from our students. Just last month, the Congressional Budget Office calculated that the government will make $51 billion this year off student loans… Yet two weeks ago, House Republicans passed a plan that would produce higher profits off the backs of our college students. And here in the Senate, Senator Coburn has introduced a similar bill that makes student loans more profitable…
The second issue is values…. Have we become a people who will support our big banks with nearly free loans, while we crush our kids who are trying to get an education?…This is morally wrong, and we must put a stop to it.”
Stafford loans help the neediest students in this country. Allowing the interest rates to double on those loans will drive up the cost of borrowing for the most vulnerable borrowers in the nation, low income college students who are striving to get a college degree in order to change the lives and fortunes of their families — ambitious students who will return great value to their workplaces and nation as they move up at work and into leadership positions in their communities.
Students and advocates who attended the Milwaukee press conference hosted by Congresswoman Moore are concerned that their futures are at stake. The student loan burden is real, and has great consequences for the economy as a whole. Student loan burden can limit the future purchase decisions for buying houses, buying cars, and even aspirations of achieving higher educational degrees.