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Proposed Interest Rate Hike Threatens College Affordability, Can Lead to 20% Increases in Cost of College Next Year
Students and families in Arizona are set to celebrate college graduations as the threat of doubled student loan interest rates looms.
If Congress fails to act by July 1, 2012 the interest rate for Direct Subsidized Stafford Loans will double, rising to 6.8 percent. 7.4 million American students will see the interest rates on their student loans double, effectively raising the average cost of college by over $1,000 for millions of students and their families. Student loan debt has already overshadowed credit card debt.
The U.S. PIRG, the Young Invincibles, the Center for American Progress and Campus Progress released a joint report on the looming threat of a major hike in the federal student loan interest rate.
The report's key findings include:
• For each year that Congress does not act, the average student and their families will pay an extra $1,000 of interest.
• The doubling in interest rates plus tuition inflation will add 20% to the cost of college next year for the average family with full Subsidized Stafford Loans.
• Support for keeping student loans affordable spans party lines: over 75% of young Democrats and young Republicans say that increasing financial aid and making college loans more affordable will help make the economy stronger.
“When I graduate, I will already have more debt than I can handle,” said NAU psychology sophomore Tyler Dowden. “This extra debt will mean that I will have to put off buying a house or starting a family.”
The average Arizona undergraduate left school with more than $21,000 in debt, according to the Arizona Board of Regents. Since 2008, Arizona’s public university budgets have been cut by $410.6 million, which resulted in tuition nearly doubling. In 2011, Arizona saw the second largest tuition increases in the country, which were only overshadowed by those in California. The average Arizona undergraduate leaves school with more than $21,000 in debt, according to the Arizona Board of Regents.
“A college education is one of the cornerstones of our society and economy, but it is already getting out of reach for many Arizonans,” said Serena Unrein, Public Interest Advocate for the Arizona Public Interest Research Group (Arizona PIRG). “Unless Congress acts soon to block the student loan interest rate increase, students will face even deeper debt to get a college degree.”
You can view the full report at: http://www.uspirg.org/reports/usp/cost-college-will-soar-if-interest-rates-allowed-double
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