The nation’s collegiate students are staring down the barrel of a doubling interest rate on academic loans on July 1, but two Queens lawmakers have sponsored legislation that could extend the reduced rate for another two years.
Interest rates on Stafford loans will double from 3.4 to 6.8 percent, as a reduction in rates signed in 2007 and extended last year is set to expire.
For Maspeth’s Gabriel Yoon, a soon-to-be sophomore at SUNY Maritime, the added cost could be overwhelming.
“Ensuring that higher education is affordable is critical to me and millions of other students and their families,” said the electrical engineering major.
Rep. Grace Meng (D-Bayside) and Rep. Steve Israel Queens, LI), as well as Yoon, called on Congress to pass the Student Loan Relief Act of 2013, which would extend the reduced interest rate for two years.
“Ensuring that [students] have access to an affordable college education is essential for them to succeed in today’s competitive job market, and it’s critical for the future health and prosperity of our nation,” Meng said. “Make no mistake, students from New York and across the nation will be hit hard if Congress fails to prevent interest rates from doubling. Balancing the federal budget is crucial. But it should not be done on the backs of our students.”
Unlike Pell Grants, which provide a vital benefit to lower-income families and students, subsidized Stafford loans benefit many middle-class families who are being squeezed by rising costs everywhere.
The lawmakers said the two-year extension would provide Congress with the time to rethink student loan interest rates and debate the best policy as part of a larger higher education reauthorization bill.
In 2007, Congressional Democrats passed and President Bush signed the College Cost Reduction and Access Act, which lowered rates on need-based Stafford loans gradually over a four-year period, decreasing the interest rate from 6.8 percent to 3.4 percent through the 2011-12 academic year. In 2012, Congress extended the reduced rate for a year, and it is set to expire on July 1st.
Outstanding student debt has topped $1 trillion nationwide. And the cost is hefty. Two-thirds of the Class of 2010 graduated with an average of $25,000 in student loan debt, while entering into an economy in which young Americans have the highest unemployment rate of any other group.
“An affordable and quality college education should be readily available, but too many students today are facing crippling student loan debt,” Israel said. “If nothing is done, millions of students and families will face higher student interest rates that they simply can’t afford.”