WASHINGTON, D.C.—More than 360,000 students across Ohio may be forced to pay thousands more in Stafford loan costs unless Congress acts to prevent the interest rate from doubling on federally-subsidized Stafford loans by July 1, 2013. Today, U.S. Sen. Sherrod Brown (D-OH) held a news conference call to announce new legislation, the Student Loan Affordability Act, 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 1.
“Affordable higher education is necessary for the welfare of our students and for the strength of our middle class,” Brown said. “Students shouldn't have to mortgage away their futures when enrolling in college. More debt means that graduates have less career choices and less ability to buy a home, start a business, and contribute to their communities. We must not allow student loan interest rates to double, costing hundreds of thousands of Ohio students an additional $1,000, per Stafford loan. The Student Loan Affordability Act would keep students loan interest rates low so college remains within reach of students who rely on federal loans to pay for their education.”
Student debt now exceeds $1 trillion—exceeding credit cards and auto loan debt, and is second only to mortgage debt for Americans. According to the Wall Street Journal, the average undergraduate student that graduates this year has approximately $30,000 in student debt, which may include subsidized Federal Direct Stafford loans. The Student Loan Affordability Act would extend and fully pay for an additional two years of the current 3.4 percent interest rate on subsidized Federal Direct Stafford Loans.
On July 1, the interest rate on subsidized Stafford loans will double, costing an additional $1,000, per subsidized Stafford loan. This affects more than 7 million Americans and more than 360,000 Ohioans. Brown shared a report on the approximate number of students at each college and university in Ohio that utilize subsidized Stafford loans which can be viewed HERE. Brown’s report includes the number of subsidized Stafford loans for graduate and undergraduate students by Ohio institution, though the legislation only affects undergraduate Stafford loans.
Brown was joined on the call by Amish Patel, Kent State University’s Student Body President, who outlined how the legislation, the Student Loan Affordability Act, will help keep college tuition more affordable for hundreds of thousands of Ohio college students like him.
Brown’s legislation will secure low interest rates until the reauthorization of the Higher Education Act, which expires at the end of this year. The Student Loan Affordability Act would lock in lower rates for students for two years as Congress works on a long-term and sustainable approach for the federal student loan program that works for both students and taxpayers.
Unlike proposals from the House, which would balance the budget on the backs of students by charging them higher interest rates or make students vulnerable to exorbitant interest rates in the future, this legislation will help ensure that college remains within reach for students who rely on federal loans to pay for their education.