Congress must act or rates double July 1
Congressman Brian Higgins said Tuesday that federal student loan rates are scheduled to increase from 3.4 percent to 6.8 percent in less than a week if Congress doesn't act. As he heads back to Washington, D.C., he is pushing for action in the House of Representatives to keep higher education borrowing affordable.
Higgins supported the College Cost Reduction and Access Act of 2007, which initially included the provision to lower Stafford loan rates from 6.8 percent to 3.4 percent through 2012. A temporary fix implemented to extend the rate through the end of June 2013 is scheduled to expire on July 1 causing rates to double.
"Student loan rates not only impact college affordability, they play a role in the larger economy by taking resources away that could otherwise be spent on goods and services, such as homes and cars, that support jobs," Higgins said. "The higher education debt burden is already difficult enough for recent graduates; adding thousands of additional dollars in interest only sets promising, educated young people up for failure."
Seven million college students in the U.S. benefit from federal Stafford loans - 422,000 in New York state, alone. Between 2009-12 11 percent of New York graduates (24,800 students) defaulted or went nine months or more delinquent on loans. The average New York graduate has approximately $27,000 in loans upon graduation.
According to a Congressional Joint Economic Committee report titled "The Causes and Consequences of Increasing Student Debt," with two-thirds of graduates borrowing to pay for the increasing cost of higher education, total student loan debt in the nation reached $1 trillion this year. For students who borrow the maximum amount of Stafford loans, a doubling of the interest to 6.8 percent would cost graduates an additional $4,500.
Higgins is a cosponsor of H.R. 1595, the Student Loan Relief Act, which would extend the current student loan interest rate of 3.4 percent through July 1, 2015. Last week, he spoke on the House Floor urging passage of the bill and was among 180-plus members signing a discharge petition aimed at forcing a vote on the bill.