I fondly remember the celebratory day that my husband Paul finally paid off his student loans. This was after we had a daughter and he had been elected to Congress! Iâ€™m reminded of this moment as we now debate whether or not as a nation we should make an investment in higher education by holding down the interest rates for public student loans.
At the end of this month, the interest rate that college students pay on loans that are backed by the federal government are scheduled to double. That means that the already high cost of college will become more expensive for students who are without the means to access a higher education independently. At a time when a college education is needed more than ever before to access good jobs and when our economy is dependent on the expansion of a highly skilled work force, Congress simply cannot allow this rate increase to take effect.
In the last decade alone, the cost of a college education has risen nearly 30%, a trend that has forced students to borrow unprecedented sums of money, often at extremely high interest rates. This year, for the first time, total outstanding student loan
In 2007, even before the Great Recession and in acknowledgement of the skyrocketing cost of higher education, Congress passed a bipartisan bill that over time cut the interest rate on subsidized student loans in half, from 6.8 to 3.4 percent. That bill is set to expire at the end of the month, and rates will jump back to 6.8%.
About 7 million undergraduates would be affected by the impending rate increase, including 161,000 in Massachusetts. Should the rate increase take effect, they will face an additional $5,200 in interest payments if they are paying off their loans over a 10-year period and $11,300 over a 20-year repayment period.
Allowing this rate interest on student loans to increase would stand in stark contrast to the aggressive steps that the federal government has taken to keep interest rates low for other entities that are important to our economic recovery. The interest rate for a 30-year mortgage is at 4 percent and the Federal Reserve Board is lending to banks at almost zero percent. Student loans should also be kept at a lower rate as our economy recovers.
Earlier this year, Democrats in the House of Representatives offered a budget that would have prevented this rate increase from taking place. House Republicans rejected this proposal and passed a separate budget which kept the interest rate on track to double this July. Mounting political pressure in recent weeks forced Republicans to finally heed a call from the President and Democrats in Congress to bring up a bill to prevent this increase. Unfortunately, they hastily assembled and passed a flawed bill that would avert the scheduled loan rate increase but which would cut funding for preventative health care services for women and children in order to pay for it.
I have cosponsored a bill in the House that would block the interest rate increase and is paid for by repealing taxpayer funded subsides for oil companies that are currently enjoying record profits, and while drivers across the country are paying record prices at the pump. I believe that this is the best path forward to ensure that the student loan rate is paid for in a way that is fair and doesnâ€™t put other essential services at risk.
Before coming to Congress, I spent nearly a decade working at a community college and during that time I had the opportunity to witness firsthand the extraordinary difference that a college education can make in a personâ€™s life. There are few issues as vital to our economic future as developing a trained and educated workforce. Keeping borrowing costs at more reasonable levels will help strengthen our national commitment to providing affordable college opportunities for all qualified students.