May 8, 2012
Dear
Re: Support S2343, the Student Loan Interest Rate Hike Act of 2012
The Senate will soon vote on S. 2343, the Stop the Student Loan Interest Rate Hike Act of 2012. Consumers Union, the advocacy and policy arm of Consumer Reports®, strongly urges you to support this bill that will help millions of students and their families pay for a college education.
Student loans are necessary in order for most students and families to attend college at all. The cost of tuition has increased by 559% since 1985, forcing more students and their families to turn to loans in order to finance higher education. As a result, student loan debt now exceeds credit card debt, topping $1 trillion outstanding.
Subsidized Stafford loans are a very common type of federal loan. According to recent data, subsidized Stafford loans made up 35%, or $40 billion, of the student loan market in the 2010-2011 school year alone.
The interest rate on federally subsidized Stafford loans is set to double from 3.4% to 6.8% for new loans starting July 1, 2012. This means that the 7.5 million students who need loans to attend college will have to pay thousands more in student loan debt. According to a recent study, two-thirds of college seniors in 2010 graduated with student loan debt, averaging $25,250. This debt makes it more difficult for graduates to stay competitive in today’s tough job market, impacting their career choices and ability to save for future investments.
In 2007, Congress approved the current 3.4% interest rate with bi-partisan support, and the College Cost Reduction and Access Act was later signed into law by President Bush.
We strongly urge you to support S. 2343 and invest in our future.
Sincerely,
Pamela Banks
Senior Policy Counsel
Washington D.C. Office
pbanks@consumer.org