Doubling of Student Loans Will Put Texas Students $400 Million in Debt
Doubling the interest rate on subsidized Stafford student loans would be detrimental for Texas students. The end of the College Cost Reduction and Access Act of 2007 would thrust debt-racked students into the sluggish job market wholly unprepared to navigate the financial pitfalls of recession-laden America. If Congress remains paralyzed by partisan ineptitude, the interest rate on student loans would double from 3.4% to 6.8% on July 1, 2012, condemning Texas students to approximately $400 million in debt per year. While students who took out loans during the five-year window of reduced interest rates would continue to pay 3.4% on their loans, any students who took out loans after the July 1st D-Day would be subjected to an increase of more than $5,000 in interest costs (Texas PIRG).
While both Democrats and Republicans hope to maintain the current 3.4% interest rate for another year, each party disagrees on how to pay for the freeze. In yet another attempt to undermine the Obamacare legislation, Republicans propose pulling $11.9 million from the preventive health fund to finance the freeze. Democrats, however, want to fund the freeze by tying up tax loopholes exploited by corporations, particularly those in the oil and gas industry. According to Rep. George Miller (D-Calif.), it is fundamentally irresponsible to “stop the interest rate hike at the risk of birth defects for newborn infants…and at the risk of young women and older women being screened for breast cancer and cervical cancer…we’ll find another way to do this.”
With roughly 56% of Texas students in student loan debt, this refusal to freeze the interest rate would doom 461,533 Texas students to years of excess debt unless Congress can come to some agreement. With less than 20 days to make a decision, Congress will determine the fate of the 7.5 million students nationwide on Stafford subsidized loans.