The clock is ticking for Congress to act.
That sentence could apply to so many issues pending before federal lawmakers. We are referring in this case to the interest rates on subsidized student loans, which doubled July 1 from 3.4 percent to 6.8 percent.
These loans are meant to help low-income students manage the increasing costs of higher education. The average student receives about $13,540 in subsidized loans in his or her college career, according to Congress’ Joint Economic Committee. The committee estimates an increase to a 6.8 interest rate would cost the average student $2,600 more on those loans.
Increasing the interest rate will add to the financial hardship of students. But the rate increase applies to only new subsidized loans issued after July 1, so Congress has time to rectify the issue before the start of the fall term – and we implore federal lawmakers to do so before they take a monthlong recess starting in early August.
Getting a higher education isn’t cheap. The National Center for Education Statistics reports that for the 2010-11 academic year, the annual cost for undergraduate tuition, room and board was an estimated $13,600 at public institutions, $36,300 at private nonprofit institutions, and $23,500 at private for-profit institutions.
Many turn to loans to help pay for college: About 37 million student loan borrowers have outstanding loans, and there is between $902 billion and $1 trillion in outstanding student loan debt in the U.S. today, according to the nonprofit American Student Assistance organization.
There are numerous personal and public benefits of attaining a higher education: Having a college degree usually means higher earnings throughout a lifetime, and those with college degrees are more likely to have a job and not rely on public assistance.
There are other ways to make college more affordable, such as reining in tuition costs, and in Illinois, fixing pensions so more money is spent on learning instead of paying retired workers.
Congress needs to do its part by lowering interest rates on student loans. The Senate is expected this week to vote on a proposal that would lower rates now, although they would go up in a few years.
That’s acceptable for now, but we hope they use the ensuing years to find a more permanent solution, so students and their families aren’t always having to guess what the bottom line will be for getting a degree.