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Senate Fails to Delay Interest Rate Hike That Threatens College Affordability, Would Lead to 20% Increases in Cost of College Next Year
[TRENTON] – In the wake of a failed Senate vote, the New Jersey Public Interest Research Group (NJPIRG) released a joint report on the looming threat of a major hike in the federal student loan interest rate. If Congress fails to act by July 1, the interest rate for Direct Subsidized Stafford Loan will double, rising to 6.8 percent. 7.4 million American students will see the interest rates on their student loans double, effectively raising the average cost of college by over $1,000 for millions of students and their families. NJPIRG released the report jointly with the Young Invincibles, the Center for American Progress, and Campus Progress.
“A college education is one of the cornerstones of our society and economy, but it is already getting out of reach for many Americans,” said Jen Kim, NJPIRG Advocate. “Unless Congress acts soon to block this interest rate increase, students will face even deeper debt to get a college degree.”
“I’ve been working 20-25 hours a week to make ends meet; in two years I’ve assembled over $15,000 in loans and am frightened to think how much more I’ll end up with by the end of college,” said Jesus Alcazar, Rutgers New Brunswick sophomore from Bridgeton, NJ. “I’m trying to achieve the American Dream, but how can I if Congress doesn’t fight for students like me?”
The report's key findings include:
- For each year that Congress does not act, the average student and their families will pay an extra $1,000 of interest.
- The doubling in interest rates plus tuition inflation will add 20% to the cost of college next year for the average family with full Subsidized Stafford Loans.
- Support for keeping student loans affordable spans party lines: 92 percent of young Democrats and 78 percent of young Republicans say that increasing financial aid and making college loans more affordable will help make the economy stronger.
“Rising college costs, tight family finances and uncertain job prospects pack a triple whammy for student borrowers when they graduate,” said Kim. “Doubling the interest rate on student loans would just make things even worse.”
"At a time when tuition is rising at more than 8 percent each year and when American families are already struggling financially, a $1,000 jump in the cost of college is the opposite of what American families and students need," said Young Invincibles Deputy Director Jennifer Mishory. "$1,000 spent on interest is money that could help a young graduate move out, pay rent, buy food, pay for a car, etc. In short, the extra $1,000 in interest is yet another barrier to young adults being financially secure and independent. It is time for Congress to stand up and act not just for the sake of our generation, but for the future of our country."
Tobin Van Ostern, Communications and Advocacy manager of Campus Progress added that, "There's little debate among young people on how to move forward. This is not a partisan issue. Our generation needs access to quality higher education. We call on our representatives in Congress to do the right thing and keep college affordable for millions of young Americans."
You can view the full report at: http://www.njpirg.org/reports/njp/cost-college-will-soar-if-interest-rates-allowed-double.
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NJPIRG, the New Jersey Public Interest Research Group is a non-profit, non-partisan public interest advocacy organization.
Track the campaign on Twitter at #DontDoubleMyRate.
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