CAMDEN—U.S. Senator Frank R. Lautenberg today visited Rutgers-Camden to push legislation that would prevent interest rates on federally subsidized Stafford student loans from doubling on July 1.
“Too many of New Jersey’s college students are burdened with heavy student loan debt, and the last thing they need is a doubling of interest rates that adds thousands to the cost of education,” Lautenberg (D-NJ) said. “We must get rid of the obstacles that keep young people from getting the education they need to succeed, not put more in their way. I will continue working in Congress to stop this interest rate hike and ensure college is affordable for all students.”
The pending rate increase would impact more than 7.4 million borrowers, according to Lautenberg, including nearly 145,000 New Jersey students. Borrowers would pay an average of $1,000 more per year of school if Congress fails to act, according to the Senator.
Only money borrowed on or after July 1 would be affected by the rate increase because federally-subsidized Stafford loans have a fixed interest rate.
In 2007, Congress passed legislation gradually lowering the interest rates on federally-subsidized Stafford loans to the current 3.4 percent. Unless lawmakers can agree on how to pay for an extension of the current rate, it will double to 6.8 percent in July.
Nationwide, student loan debt now totals more than $1 trillion, surpassing credit card debt. In New Jersey, 66 percent of all college students graduated with debt in 2010, and their average debt was $23,792. At Rutgers-Camden, 75 percent of students graduated with debt, and their average debt was $21,330.
At today’s event, Lautenberg announced his support for the “Stop the Student Loan Interest Rate Hike Act of 2012,” which will be considered in the Senate next week. The bill was introduced by Majority Leader Harry Reid (D-NV) to prevent the rate hike from going into effect this summer.
The Senate Democrat bill would pay for the $6 billion cost of maintaining the current student loan interest rate by eliminating a corporate tax loophole. Republicans want to use money from a public health fund created in the 2010 health care reform law to pay for keeping the student loan interest rate at 3.4 percent for another year.