PERRYSBURG, OH—More than 382,000 students across Ohio—including 25,000 in Lucas County alone—would be forced to pay significantly more for their student loans unless Congress passes legislation by July 1st to block the interest rate from doubling on federally-subsidized Stafford loans. Today, U.S. Sen. Sherrod Brown (D-OH) joined students from Owens Community College to call for passage of Brown’s bill that would maintain the current interest rate, which is set at 3.4 percent, and prevent a hike to 6.8 percent scheduled for July 1st. Brown also released a report on the number of students at each college and university in Ohio that utilize subsidized Stafford loans.
“Unless Congress acts, in less than a month, approximately 10,000 Owens Community College students will be forced to pay more for their Stafford loans,” Brown said. “Already, recent college graduates are struggling to find work, with half of young college graduates jobless or underemployed. Allowing the interest rates on federal student loans to double is a step backwards. Ohio students—and our economy—can’t afford this sucker-punch at a time when we need to be doing more to get our economy back on track. Time is running out, and that’s why passing this bill, which would maintain the current interest rate on Stafford loans, is so important.”
Three students—attending OCC with the help of subsidized Stafford loans and all planning to transfer next year to a four-year institution—shared their stories of how Stafford loans have helped them afford the cost of college. Brown and the students were also joined by Dr. Betsy Johnson, the dean of Enrollment Services at OCC, who discussed how affordable student loans are critical for the roughly 10,000 Owens students that rely on federally-subsidized Stafford loans to earn their college degree. The three students are:
- Jakki Kleinhans, a sophomore transferring to BGSU and studying for a general arts and sciences degree
- Clinton “CJ” Reed, a sophomore planning to transfer to a four-year institution, currently studying chemistry
- Megan Posey, a sophomore transferring to the University of Toledo, currently studying education
Brown outlined how his legislation, the Stop the Student Loan Interest Rate Hike Act of 2012, would help keep college tuition more affordable for hundreds of thousands of Ohio college students. According to the Senate Health, Education, Labor, and Pensions (HELP) Committee, a higher interest rate would add approximately $1,000 in loan debt per loan for the average student. The Stop the Student Loan Interest Rate Hike Act, which is fully paid for, would keep the student loan interest rate from climbing by eliminating a tax loophole that the watchdog agency, the Government Accountability Office (GAO), has determined is a problem as it currently allows some shareholder-employees of so-called “S corporations” to avoid paying their fair share of Social Security and Medicare payroll taxes.
The College Cost Reduction and Access Act of 2007 cut the fixed interest rates on newly-subsidized Stafford loans for undergraduate students to 3.4 percent over a set period of time, but the interest rates on any new subsidized Stafford loans will double to 6.8 percent on July 1, 2012 unless Congress takes action. The rate increase would not apply to loans that are currently in repayment or that have already been disbursed, but students still attending school after July 1st that need to take out new federally-subsidized Stafford loans would pay higher rates on the new loans, adding even more to their existing debt load.
Last year, Brown introduced the Student Loan Simplification and Opportunity Act of 2011, legislation that would simplify the student loan repayment process. This legislation would help borrowers avoid financial penalties for missed payments, save Ohio graduates money on their student loans, and bolster the federal Pell Grant program that helped send more than 240,000 Ohio students to college from 2008-2009.