Student loan interest rate set to double in less than two weeks
Representative Kathy Hochul, NY-26, sent a letter Monday to the House and Senate leadership urging them to work in a bipartisan manner to develop legislation to prevent the interest rate of Federal Stafford Direct student loans from doubling on July 1.
"As we work to improve our national economy, it is critical that we invest in the education of our young people," Hochul said. "The deadline to extend the 3.4 percent interest rate for federal Stafford Direct loans is fast approaching, and I urge you to work together to develop legislation that will pass both the House and Senate and prevent the interest rate from doubling. Young Americans deserve the opportunity to receive a college education. Unfortunately, Congress' inability to compromise is threatening their future."
In 2007, Congress passed the College Cost Reduction and Access Act, which lowered student loan rates to 3.4 percent for a four-year period. The provision of the CCRAA that provides relief for student loans is set to expire on July 1 of this year, causing the interest rates on loans disbursed starting that date to double to 6.8 percent. If Congress does not act, the nearly 500,000 student borrowers in New York state for the 2012-13 school year, and more than 7 million students nationally, will incur an additional $6.3 billion in repayment costs.
Ahead of the potential doubling of student loan interest rates, Hochul has held roundtable discussions with college students and administrators at the University of Rochester and Daemen College to hear their concerns and discuss the burden increased debt will have on students and their families.