WASHINGTON, D.C.—With a tentative deal reached to prevent the interest rates on subsidized Stafford loans from doubling for students on July 1st, U.S. Sen. Sherrod Brown (D-OH) renewed his call to Congress to pass legislation to maintain the current interest rate on these loans. Brown highlighted the fact that approximately 382,000 students across Ohio will be forced to pay significantly more for their student loans if Congress fails to act. He is one of three lead Senate sponsors of the Stop the Student Loan Interest Rate Hike Act of 2012, which 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.
“In just four days, hundreds of thousands of Ohio students will pay more for their education unless Congress moves to maintain the current interest rates on subsidized Stafford loans. With college costs on the rise, allowing the interest rates on federal student loans to double would be salt in the wound for these students – who are already likely to graduate with thousands of dollars in loan debt,” Brown said. “Time is running out, and that’s why passing a bill to maintain the current interest rate on Stafford loans is so important.”
Brown is an original sponsor of the Stop the Student Loan Interest Rate Hike Act of 2012, which 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 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 1st, 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.