Scheduled Interest Rate Hike Comes on the Heels of a New Analysis Showing That Half of Young College Graduates Are Jobless or Underemployed
Wright State University, University of Toledo Students Join Brown on Call
WASHINGTON, D.C.—More than 382,000 students across Ohio would be forced to pay more each year in college loan costs unless Congress acts to block the interest rate from doubling on federally-subsidized Stafford loans by July 1st. Today, U.S. Sen. Sherrod Brown (D-OH) announced new legislation 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 revealed a report on the number of students at each college and university in Ohio that utilize subsidized Stafford loans. The average Ohio student graduates from a four-year college or university with nearly $27,000 in debt.
“Earlier this week, a new report revealed that half of young college graduates are either jobless or underemployed. It’s clear that we need to do more to educate young people for the jobs of the 21st century and connect them with businesses who are looking to hire,” Brown said. “Allowing the interest rates on federal student loans to double is a step backwards. American 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.”
Student debt has reached nearly $1 trillion—exceeding credit cards and auto loans. Meanwhile, a new analysis released earlier this week by the Associated Press found that half of young college graduates are either jobless or underemployed in positions that don't fully use their skills and knowledge.
Brown was joined on the call by two Ohio students using Stafford loans to pay for their education—Paul Reed at Wright State University and Justin Kuemerle at the University of Toledo—to outline how the 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 for the average student.
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.