The Honorable Richard C. Shelby
United States Senate
304 Russell Senate Office Building
Washington, DC 20510-0103
April 24, 2012
Dear Senator Shelby
Consumers Union, the advocacy and policy arm of Consumer Reports®, urges the Senate to take action to prevent interest rates from doubling on student loan borrowers starting July 1. Keeping college affordable is not only good policy – it’s a nonpartisan issue.
The interest rate on subsidized Stafford loans is set to double from 3.4% to 6.8% for new loans starting July 1, 2012. This means that admitted students about to enroll in college, and current students about to sign up for new loans for the upcoming academic year, will have to pay thousands more going forward. 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 White House estimates that 7.4 million students across the country will be affected by the rate increase.
At present, loans are necessary in order for most students and families to attend college at all. The cost of tuition has increased five-fold 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. According to recent estimates, two-thirds of all college students graduate with loans, averaging over $25,000 per student.
The current 3.4% interest rate was approved in 2007 with bipartisan support. Back in 2007, Congress passed the College Cost Reduction and Access Act with broad bipartisan support and it was signed into law by President Bush. It reduced the interest rates on subsidized Stafford loans incrementally over four academic years, from 6.8% to the current 3.4%.
Higher education in America is essential for economic opportunity and personal growth, as well as the social and economic prosperity of our country. We understand that legislation will be considered shortly in Congress to extend the current rate. We urge you to make higher education a priority this year and prevent interest rates on subsidized Stafford student loans from doubling this July.
If you any questions, please do not hesitate to contact us.
The Honorable Richard C. Shelby
United States Senate
304 Russell Senate Office Building
Washington, DC 20510-0103
April 24, 2012
Dear Senator Shelby
Consumers Union, the advocacy and policy arm of Consumer Reports®, urges the Senate to take action to prevent interest rates from doubling on student loan borrowers starting July 1. Keeping college affordable is not only good policy – it’s a nonpartisan issue.
The interest rate on subsidized Stafford loans is set to double from 3.4% to 6.8% for new loans starting July 1, 2012. This means that admitted students about to enroll in college, and current students about to sign up for new loans for the upcoming academic year, will have to pay thousands more going forward. 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 White House estimates that 7.4 million students across the country will be affected by the rate increase.
At present, loans are necessary in order for most students and families to attend college at all. The cost of tuition has increased five-fold 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. According to recent estimates, two-thirds of all college students graduate with loans, averaging over $25,000 per student.
The current 3.4% interest rate was approved in 2007 with bipartisan support. Back in 2007, Congress passed the College Cost Reduction and Access Act with broad bipartisan support and it was signed into law by President Bush. It reduced the interest rates on subsidized Stafford loans incrementally over four academic years, from 6.8% to the current 3.4%.
Higher education in America is essential for economic opportunity and personal growth, as well as the social and economic prosperity of our country. We understand that legislation will be considered shortly in Congress to extend the current rate. We urge you to make higher education a priority this year and prevent interest rates on subsidized Stafford student loans from doubling this July.
If you any questions, please do not hesitate to contact us.
Sincerely,