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College students would not have to worry about the interest rate on their student loans doubling for at least one more year, if Congress votes today to pass on legislation to extend the existing interest rate.
Ohio’s two U.S. senators favor the Stop the Student Loan Interest Rate Hike Act of 2012, which would extend the 3.4 percent interest for one more year. The two legislators also favor extending the rate longer.
The bill, co-sponsored by Democratic U.S. Sen. Sherrod Brown, of Ohio, and Democratic Sen. Jack Reed, of Rhode Island, would maintain the 3.4 percent interest rate starting July 1 for one more year instead of letting the rate double to 6.8 percent.
“Earlier this week, a startling report confirmed what I have heard from people all over the state on college campuses — whether it is a two-year school, four-year school, private schools — that half of young college graduates are jobless or underemployed in positions that could fully use their skills,” Brown told media on the call. “It is clear we need to do more to educate young people, we need to do more to connect them with businesses who are looking to hire.
“Allowing the interest rate on Stafford loans — which is one of the most important tools to help students afford rising college costs — and allowing those interest rates to double is a step backward,” the senator from Ohio said. “American students and our economy cannot afford this one-two punch in the gut — especially our students who are already struggling to afford rising college costs.”
Republican U.S. Sen. Rob Portman also favors the bill and helping U.S. students, and he objects to President Barack Obama using this as a point of division with Republicans.
“I think we ought to extend the rate for another year and this is what the president thinks as well so I don’t think there is a big difference here and I understand Republican presidential candidate Mitt Romney is of the same position,” Portman said Wednesday in a separate media teleconference. “Part of the health care bill is paid for by the administration taking the difference between what they can borrow at and what most students pay and putting some of that money into the health care bill.
“It is not only that the president is misleading students, saying that somehow he has a different position than Republicans but I don’t think he does,” he said. “This is an opportunity for Republicans to clarify our position on this — it may not be tomorrow but it may come in the next couple of weeks.”
Portman explained the difference in the interest rate from 3.4 percent to 6.8 percent would create additional funds to pay for a portion of the Affordable Care Act, or the health care bill passed two years ago.
If the interest rate doubles, the increase would affect more than 382,000 Ohio students, and the average Ohio student would see their student loans increase by at least $1,000 in interest debt, Brown said citing two different reports. The average Ohio student graduates from a four-year college or university with nearly $27,000 in debt.
He noted overall student debt for the nation has reached $870 billion, exceeding the U.S. consumer debt on credit cards and auto loans. This hurts the economy because students are shifting their new earnings from homes, durable goods and cars to their student loans.
“More and more students continue to enroll in higher education and we want to make public higher education more accessible but the balances continuing climbing,” Brown said. “This means fewer of your young adults will be able to purchase a home or start a family or start a business or go on to graduate school. This bill will ensure more middle class Ohioans can achieve their dream of attending college.”
In 2011, Brown also introduced the Student Loan Simplification and Opportunity Act, legislation that would simplify the student loan repayment process. This legislation would help borrowers avoid financial penalties for missed payments, save Ohio graduates money on their student loans, and bolster the federal Pell Grant program that helped send more than 240,000 Ohio students to college from 2008-2009.