Students Need More, Not Less, Affordability in Federal Loan Programs, Witnesses Tell House Education Panel
WASHINGTON – While college tuition continues to increase at rates well above inflation, students and families need continued access to affordable federal student loans, witnesses told the House Education and Workforce Committee today.
“A college degree plays a critical role in most American Dreams,” said U.S. Rep. George Miller (D-Calif.). “Unfortunately, we know all too well that the rising cost of higher education is pushing those American Dreams a little further out of reach for too many families. We have a moral and economic obligation to ensure that all qualified students who want to attend college can afford to go. Our ability to compete in the global marketplace depends on it.”
Witnesses testified that access to reliable federal student loans needs to be a component of reauthorizing the Higher Education Act (HEA). A full reauthorization of HEA should promote affordability, retention and completion. The Higher Education Act is due for reauthorization in 2014.
As the committee takes next steps to reauthorize HEA, the pending interest rate increase on subsidized loans will require Congressional action prior to a full reauthorization. On July 1, interest rates on subsidized Stafford loans will double to 6.8 percent for millions of undergraduate students unless Congress acts. For each year Congress does not act, the neediest students will see their costs increase by over $1,000 through repayment.
“It is critical that public policy remain capable of making higher education affordable for the lowest-income and most-at-need students that the market might otherwise leave behind,” said Charmaine Mercer, Vice President of Policy at the Alliance for Excellent Education. “Increased educational attainment helps individuals achieve their personal goals, improves their surrounding community, and aids the recovery and growth of the economy.”
Last year, the Consumer Financial Protection Bureau found that student loan debt surged above $1 trillion – surpassing credit card and auto-loan debt. Today, the average student graduates with over $26,000 in debt.
This month the New York Federal Reserve released a report on the impact of rising student loan debt on our economy. It found that student loan debt has almost tripled in the last eight years as more students need to borrow more money to go to school. The report also found that borrowers are finding it more difficult to secure other types of credit once they finish school, such as home mortgages, as they struggle to pay back their loans.
Miller is the co-author of the College Cost Reduction and Access Act of 2007. The legislation helped make higher education more financially manageable by lowering interest rates on need-based student loans to 3.4 percent. Unfortunately, that reduced rate will double to 6.8 percent this summer if Congress fails to act.
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