The countdown to the July 1 deadline for setting a new federal student loan interest rate carried with it all the drama we’ve come to expect from Congressional financial cliffhangers. There was lots of finger-pointing as the clock wound down. Senate Republicans blocked a proposal to extend the current 3.4 percent rate for federally subsidized Stafford loans, causing it to temporarily double to 6.8 percent. Finally, last week, Congress agreed on a compromise that would link the interest rate to the 10-year treasury bond—which is still likely to lead to interest rates on new loans more than doubling over the next four years.
But some students working on issues of college affordability and student debt see the interest-rate issue as symbolic at best and a distraction at worst.
Subsidized Stafford loans—which allow low-income undergraduates to have the government pay their loan interest while they’re in school—make up only 2.4 percent of the more than $1 trillion in student debt owned by the federal government. Chris Hicks, student debt campaign organizer for Jobs with Justice, argues that debating interest rates only scratches the surface of the student debt problem and does nothing to address the outstanding debt already owed by students and recent graduates.
“We’re talking about such a small piece of it, it’s clearly not where the priority should be,” Hicks said.
As student debt has grown exponentially in recent years, it’s become a mounting concern on campuses across the city and the nation. According to the Consumer Financial Protection Bureau, which oversees federal loans, student loan debt increased 20 percent from the end of 2011 to May 2013, and now totals $1.2 trillion when private loans are included.
Posted on 18 December 2013
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