Miller, Hinojosa Urge Action to Prevent Student Loan Interest Rate Increase
WASHINGTON, D.C. - U.S. Reps. George Miller (D-CA), the senior Democrat on the House Committee on Education and the Workforce, and Rubén Hinojosa (D-TX), the senior Democrat on the Higher Education and Workforce Training Subcommittee, today sent a letter to Chairman John Kline (R-MN) urging action to prevent the student loan interest rate hike that is scheduled to take effect in July.
“This July, more than 7 million undergraduate students will see the interest rates on their need-based student loans double from 3.4 percent to 6.8 percent if Congress fails to act. This increase will cost the average borrower more than $2,800 in additional interest payments. At a time when the economy is on fragile footing, the youth employment rate is at its lowest in 60 years, and other interest rates are at historic lows, we should not be asking students and families to pay more on their student loan debt. We respectfully urge you to take action in the coming weeks in the committee to ensure that students’ interest rates do not increase,” said Miller and Hinojosa.
House Democrats have worked tirelessly to help students and families afford college and manage their debts. The College Cost Reduction and Access Act (CCRAA) of 2007, coauthored by Miller and Hinojosa, brought the current interest rate on some federal student loans to 3.4 percent. If Congress doesn't act before July, the rate will jump back up to 6.8 percent, making it much more difficult for many American students and their families to afford a college education.
The text of the letter follows:
Dear Chairman Kline:
This July, more than 7 million undergraduate students will see the interest rates on their need-based student loans double from 3.4 percent to 6.8 percent if Congress fails to act. This increase will cost the average borrower more than $2,800 in additional interest payments. At a time when the economy is on fragile footing, the youth employment rate is at its lowest in 60 years, and other interest rates are at historic lows, we should not be asking students and families to pay more on their student loan debt. We respectfully urge you to take action in the coming weeks in the committee to ensure that students’ interest rates do not increase.
Subsidized student loans are a critical tool for many students and families paying for higher education. Congress has worked hard over the last five years to increase the maximum Pell Grant award by more than $1,000; however, only 42 percent of dependent undergraduate subsidized student loan borrowers also receive a Pell Grant. It is equally important that Congress continues to ensure that subsidized student loans remain an affordable option for students.
Further, it is imperative that this Committee considers this issue soon. The interest rate is set to change this July, but students and families need to plan for the coming year in the next few months. They will be receiving student aid packages from their institutions of higher education this spring. My understanding is that, in order to ensure that students receive accurate information, and that the Department of Education has adequate time to adjust to a change, we should change the law before the end of May.
At an October 25, 2011, hearing of the Higher Education and Lifelong Learning Subcommittee, you and other members on both sides of the aisle agreed that a 6.8 percent interest rate is too high to be charging students. We agree. And we stand ready to work with all members of our committee to support all students, especially those with financial needs, and prevent interest rates from increasing.
Sincerely,
GEORGE MILLER RUBÉN HINOJOSA
Senior Democratic Member Ranking Member
Committee on Education and the Workforce Subcommittee on Higher Education and Workforce Tra
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