April 24, 2012
WASHINGTON, D.C. – Interest rates on new subsidized Stafford student loans will double to 6.8 percent beginning in July unless Congress extends a cap that has helped make the loans more affordable for millions of Americans. Consumers Union, the policy and advocacy arm of Consumer Reports, urged lawmakers today to pass legislation to keep interest rates at their current 3.4 percent.
“Students and their parents are already struggling to keep up with the runaway costs of paying for college,” said Suzanne Martindale, staff attorney for Consumers Union. “Now is not the time to pile thousands of dollars in more debt on their backs by allowing student loan interest rates to double. Keeping interest rates low will help students afford the education they need to stay competitive in today’s tough job market. Congress should invest in our future and side with students and their families by extending the interest rate cap.”
A vote is expected in the Senate in the coming weeks on legislation to keep the current interest rate in place. The effort to extend the interest rate cap is supported by both President Barack Obama and Governor Mitt Romney. The existing interest rate cap was enacted through bi-partisan legislation passed by Congress in 2007.
An estimated 7.4 million borrowers will face higher interest rates on new subsidized Stafford student loans beginning in July if Congress fails to extend the cap on interest rates. If interest rates double to 6.8 percent, the average student will owe thousands more in student loan debt.
Two-thirds of all college students now graduate with student loan debt, compared to just one-third a decade ago. On average, these students graduate with $25,000 in debt. At over $1 trillion, student loan debt now tops what Americans owe on their credit cards.
Contact: Michael McCauley, mmccauley@consumer.org, 415-902-9537 (cell) or David Butler, dbutler@consumer.org or Kara Kelber, kkelber@consumer.org, 202-462-6262