From the Office of U.S. Sen. Barbara Mikulski:
Senator fights to protect 105,000 Maryland students from federal loan rate doubling
Republicans continue opposition which led to automatic doubling of loan rates on July 1, an average increase of $1,000 on new loans
WASHINGTON – U.S. Senator Barbara A. Mikulski (D-Md.) today voted to support the Keep Student Loans Affordable Act of 2013 to roll back the doubling of federal student loans for more than 105,000 Maryland students. Senate Republicans voted against proposals to prevent federal Stafford student loans from doubling from 3.4 percent to 6.8 percent on July 1, which led to an average increase of $1,000 for more than seven million undergraduate students nationwide taking out new loans. Today, Senate Republicans filibustered the bill by a vote of 51 to 49 to prevent Congress from moving ahead with the legislation.
“Higher education should be part of the American dream, not a financial nightmare. By filibustering this common-sense legislation, Senate Republicans have continued to block access to the opportunity ladder for our future middle class,” Senator Mikulski said. “In order for America to out-build and out-innovate the rest of the world, we first must out-educate – which means we have to make investments in federal grants and student loans. The bill that Senate Republicans blocked today would give our young people access to the freedom to achieve, to be able to follow their talents and to be able to achieve higher education in whatever field they will be able to serve this country. I will continue to fight for a long-term solution to protect students, middle class families and our future workforce from devastatingly high interest rates.”
Senator Mikulski cosponsored the legislation introduced by Senator Jack Reed (D-R.I.) to prevent the rate hike for one year. The bill would keep interest rates on federal Stafford student loans from doubling from 3.4 percent to 6.8 percent, an increase of $1,000, for more than seven million undergraduate students. As the cost of a college education continues to rise, this bill helps middle class families that struggle to afford college. The ballooning student debt rate is creating a drag on the U.S. economy. As student loan debt has risen, home ownership and car ownership have declined for young households. Keeping the cost of borrowing low will help reduce the amount students owe and help give them purchasing power that can improve our overall economy.
The rising tide of total student debt, which has crested above $1 trillion for the first time in our nation’s history, has passed credit cards and auto loans to become the second-largest type of consumer debt behind mortgages. Research by FICO Labs found that in 2005 the average student loan debt was just over $17,000. In 2012 it rose above $27,250 – a 58 percent increase in just seven years.
Senator Mikulski has also announced her support for the Student Loan Affordability Act of 2013 and the Bank on Student Loans Fairness Act, which would lower need-based student loan interest rates to slow the rapid accumulation of student-loan debt.
Senator Mikulski’s statement submitted to the Congressional Record follows:
“I am proud to rise today to support the Keep Student Loans Affordable Act. This bill would extend the current interest rate of 3.4 percent for subsidized Stafford Loans for the next school year. This interest rate reflects a record-low for interest rates on federal student loans, and these loans can only go to students and families that demonstrate a need for them; 60 percent of dependent subsidized loan borrowers come from families with incomes of less than $60,000. Subsidized Stafford loans help more than seven million college students without worrying that the interest on their loans will begin accruing while they’re in school. It helps more than 105,000 students in Maryland. Middle class families are feeling stretched and stressed and if we fail to act, students could be facing an additional $1,000 in debt over the life of their loans.
“I would also like to announce my support for the Bank on Student Loans Fairness Act, introduced by Senator Elizabeth Warren. This legislation would lower the current interest rate of 3.4 percent to 0.75 percent for subsidized Stafford Loans for the next school year, which is the same interest rate that banks pay. Banks have arbitrarily raised interest rates on consumers, and applied higher interest rates retroactively. They charged fees without any legitimate purpose – and then charged interest on top those unfair fees. And they marketed their products to college students who they knew couldn’t afford the credit they were providing.
“The banks are not looking out for the best interest of students; they’re looking after themselves to make a profit. The federal government has worked hard to keep student loan interest rates as low as possible to ensure that access to higher education remains a viable option for students and their families. That’s why it’s important that we work together to keep the interest of students at heart and not create additional burdens on them. So why not let students pay the same interest rates as banks?
“I’ve said this often, but we in this country enjoy many freedoms: the freedom of speech, the freedom of the press, the freedom of religion. But there’s an implicit freedom our constitution doesn’t lay out in writing, but its promise has excited the passions, hopes, and dreams of people in this country since its founding. The freedom to take whatever talents God has given you, to fill whatever passion is in your heart, to learn so you can earn and make a contribution – the freedom to achieve.
“When I was a young girl at a Catholic all-girls school, my Mom and Dad made it clear they wanted me to go to college. But, right around graduation, my family was going through a rough time because my Dad’s grocery store had suffered a terrible fire. I offered to put off college and work at the grocery store until the business got back on its feet. My Dad said, ‘Barb, you have to go. Your mother and I will find a way, because no matter what happens to you, no one can ever take that degree away from you. The best way I can protect you is to make sure you can earn a living all of your life.’ My father gave me the freedom to achieve. And this legislation will give millions of Americans that same freedom without adding a dime to the deficit.
“Students will bless us if we’re successful in keeping their student loan interest rates as low as possible. Getting a college education is the core of the American dream and I am going to be sure that every student has access to that dream and make sure that when they graduate their first mortgage isn’t their student debt. Senator Reed’s legislation should be passed in a swift, expeditious, uncluttered way. It gives our students access to the American dream. It gives our young people access to the freedom to achieve, to be able to follow their talents, and to be able to achieve higher education in whatever field they will be able to serve this country.
“While our work isn’t done when it comes to ensuring access to affordable higher education, this bill helps us get there. While these bills will fix the problem today, I will continue to work with my colleagues to figure out a longer-term solution.”