Today,
the Arizona Public Interest Research Group (Arizona PIRG) joined
thousands of college students across the country calling on Congress to
stop the biggest student loan cuts in history when the House of
Representatives takes up the issue in early February.
Just before Christmas, the U.S. Senate passed a bill that cuts the
federal loan programs by $12.7 billion dollars. If passed, federal
college loans will become more expensive for student and parent
borrowers. Approximately 70 percent of these derive from higher loan
interest rates for borrowers and from redirecting excessive student and
parent payments to private lenders.
“
Arizona students will be financially squeezed by the proposed cuts,”
stated Diane E. Brown, Executive Director of Arizona PIRG. “This move
will only discourage eligible students from the middle and lower middle
classes to attend to begin with and will be a huge financial obstacle
for graduates.”
The bill generates at least 70% of its savings by making loans more
expensive for borrowers: approximately $15 billion out of the $21
billion in total cuts. Specifically the bill generates:
-
Almost $13 billion from excessive subsidy payments that student and
parent borrowers make to lenders. This bill uses this money to pay for
new tax cuts rather than sending it back to students through additional
need-based grant aid or lower interest rates.
- Approximately $2 billion by increasing the parent loan interest rate from 7.9% to 8.5%.
“As
the cost of higher education skyrockets, students are increasingly
relying on work and loans to pay tuition bills. Millions of student
borrowers struggle with student loan repayment each year; an estimated
39 percent of recent college graduates have unmanageable monthly loan
payments,” said Brown. “A college degree must be affordable and
accessible for families and students.”
College students across the U.S. have generated over 10,000 phone calls
and hundreds of news articles about the cuts in the past two months
alone. Today marks the sixth call in day nationally.
For more information, visit www.studentaidaction.com or www.usstudents.org.
