"In 2012, nearly 500,000 Texas students received Stafford loans to help finance their college educations. These loans are available to students from low- to moderate-income backgrounds who demonstrate a need for assistance.
While students who borrow under the program are in school, the federal government pays the interest on their loans. Students do not begin repayment until graduation. This past Monday, interest rates on the loans increased to an unacceptable and unduly burdensome 6.8 percent, from 3.4 percent. Republican members of Congress resisted Democratic efforts to maintain the lower rate.
Rather than seeking to reduce the deficit by closing tax loopholes for the wealthiest Americans, Republican lawmakers insisted that an additional financial burden be placed on the backs of students from poor and middle-class families.
We ask our young people to prepare for the future by attending college and acquiring one, two and sometimes three degrees. Many of those who follow our suggestions find themselves unemployed and faced with a monumental wall of debt on the day they receive their diplomas.
Nationally, 7 million students will be affected by increased rates. Congressional budget analysts predict the increase will cost a student pursuing a four-year degree an additional $2,600.
Approximately 20 million American students attend college or a university each year, according to the Chronicle of Higher Education, a Washington-based educational organization. I believe that the new rate will have a chilling impact on the ability of high school students to pursue college degrees. Nearly 60 percent of those who attend college borrow money to further their studies.
At a time when the number of American undergraduate and graduate degrees is slipping compared to those earned in other industrialized nations, we must do all we can to encourage students to seek higher education.
Interest rates for our banking institutions are lower than they have been for decades. At the same time, the jobless rate is unacceptably high. Some college graduates experience a job search that lasts for months or years. Many are faced with debt while they are unemployed or underemployed.
According to American Student Assistance, a Boston-based nonprofit that advises undergraduate and graduate students, 41 percent of student borrowers become seriously delinquent in loan repayment five years after they complete their studies. Most say their inability to find work is the principal reason for their plight.
Student debt in America is enormous. According to the Federal Reserve Bank of New York, Americans owe approximately $ 1 trillion in education loans. That exceeds what is owed on automobile loans, $730 billion, and credit-card debt, $693 billion.
According to the College Board, a testing and resource service, the average public college tuition for 2012 was $8,600. The cost of tuition at a private school that same year was $29,000.
Graduates, faced with mounting debt, are less likely to purchase homes and begin personal savings. Many, afraid of defaulting on loans, are accepting salaries that simply cover their living expenses. In such a climate, the spirit of risk-taking or starting a new business is discouraged.
Our approach to ensuring that our students are properly educated must be comprehensive and equitable. Congress must seek a solution that does not unfairly burden students. The current interest rate will not accomplish that objective.
During the 2012 presidential election, in an attempt to win student voters, leadership in both parties pledged that the lower rate would be extended for a full year.
I intend to fight to realize that promise. Congress must revisit the issue before the summer recess begins in August and demonstrate to our students that we are serious about their educational needs and their financial well-being." - Congresswoman Eddie Bernice Johnson
Source - Dallas Morning News - Op Ed
