PDT Staff Writer
U.S. Sen. Sherrod Brown (D-OH) says more than 360,000 students across Ohio would be forced to pay thousands more each year in college loan costs unless Congress acts to block the interest rate from doubling on federally-subsidized Stafford loans by July 1, 2013. On Wednesday, Brown introduced legislation that would maintain the current interest rate, which is set at 3.4 percent, and prevent a hike to 6.8 percent scheduled for July 1.
“Students and their families are excited about graduation time,” Brown said. “It’s a hopeful time for people, whether they went to Kent State or Sinclair, or Cincinnati State, or O.U. (Ohio University), or the University of Toledo, or Dennison, or wherever. We also know that young people look forward to their post-college futures, far too many of them leave campus with a lifetime debt, or at least a huge debt.”
Student debt now exceeds $1.1 trillion—exceeding credit cards and auto loan debt, and is second only to mortgage debt for Americans. Brown outlined the Student Loan Affordability Act of 2013, which he says will help keep college tuition more affordable for hundreds of thousands of Ohio college students.
Brown said the heavier debt students incur means they will be paying off their loans instead of doing things such as buying a home, starting a business or continuing on to graduate school.
“According to the Wall Street Journal, the average student loan debt for a borrower earning a bachelor’s degree, is $30,000,” Brown said. “That’s why subsidized federal direct Stafford Loans are so important. Most independent Stafford borrowers, 80 percent come from families making less than $30,000 a year. Unless Congress acts soon, more than 360,000 college students in Ohio will face an average of $1,000 more in costs over the life of their loan for each year of college per Stafford Loan.”
The College Cost Reduction and Access Act of 2007 cut the fixed interest rates on newly-subsidized Stafford loans for undergraduate students to 3.4 percent over a set period of time, but the interest rates on any new subsidized Stafford loans will double to 6.8 percent on July 1, 2013 unless Congress takes action. Brown said the rate increase would not apply to loans that are currently in repayment or that have already been disbursed, but students still attending school after July 1 that need to take out new federally-subsidized Stafford loans would pay higher rates on the new loans, adding even more to their existing debt load.
Frank Lewis may be reached at 740-353-3101, ext. 252, or at firstname.lastname@example.org. For breaking news, follow Frank on Twitter @FrankLewisPDT.