Pressure mounting on Congress to keep down student loan interest

The pressure is mounting on the U.S. Congress to act to keep down interest rates on federal Stafford loans, which are helping  225,000 Georgia students attend college. A critical vote will be held Tuesday on the interest rate on those loans, which will double if Congress does not intervene.

In a conference call today, Georgia PIRG said the doubling of the interest rate from 3.4 percent to 6.8 percent on new student loans — students have to reapply every year for the loans — will push up the college loan debt load, which already exceeds credit card debt in the United States.

The average Georgia student could see an additional $913 in repayment costs if the federal loans carry an interest of 6.8 percent. The average Georgia student graduates with nearly $19,000 in debt now.  (That is less than the national average, which is $25,000.)

“We see students every day with financial need who keep struggling over how they are meeting college expenses,” said Philip E. Hawkins , associate director of financial aid at Kennesaw State University. “They struggle with not only how they are doing meeting the costs, but, fast forward to when they graduate, how they are going to pay those loans.”

According to Georgia PIRG:

Higher education advocates released new data today showing that an anticipated increase in the student loan interest rate would cost Georgia students $200 million per year. The increase would affect federally subsidized Stafford loans, which are provided to almost 7.5 million low and moderate-income students nationwide each year. If Congress does nothing, then beginning on July 1st, the interest rate will double from 3.4% to 6.8% on new student loans.

“In today’s economy, students need a college education to get ahead,” said Rich Williams Higher Education Advocate for Georgia PIRG. “Doubling the interest rate for student loans would make this goal harder to achieve for thousands of Georgians.”

The average student borrower already graduates with over $25,000 in student loans. On average, the doubling of the interest rate would add approximately $1,000 for every year a student takes out a loan, adding up to more than $4,000 over a four-year education. To stave off the rate hike, Congress needs to act by July 1st to maintain the existing interest rate. Without action, interest rates on these loans will double, resulting in significant new debt for future graduates. A vote on the issue is schedule in the United States Senate for Tuesday.

“With college costs increasing and available financial resources decreasing, student loans are becoming an inevitable option for students to pay for college,” said Ron Day, Financial Aid Director at Kennesaw State University.

In comments today on the student loan crisis, President Obama told high schools students in Virginia:

Now, I want to give you guys some relief from that debt.  I don’t want you to start off life saddled with debt.  And I don’t want your parents to be taking on so much debt as well. Because when you start off already owing a lot of money graduating from school it means making a lot of really tough choices, like maybe waiting longer to buy a house, or to start a family, or to chase that career that you really want.

Now, Congress also has to do its part. Right now, that means preventing the interest rates on federal student loans from doubling, which would make it harder for you to pay for college next year. The three classmates of yours that I met, they’re all getting Stafford loans to help pay for college. And these Stafford loans, right now, have a very low interest rate, because five years ago Congress cut the rate for these student loans in half.  That was a good idea.  It made college more affordable.

But here’s the bad news — on July 1st — less than two months from now — that rate cut expires, and interest rates on those loans will double overnight. That’s not good. For each year that Congress doesn’t act, the average student with these Stafford loans will rack up an additional $1,000 in debt.  That’s like a $1,000 tax hike for more than 7 million students across America.

You guys shouldn’t have to pay an extra $1,000 just because Congress can’t get its act together. This should be a no-brainer. This is something that we need to get done.

–From Maureen Downey, for the AJC Get Schooled blog

51 comments Add your comment

Ron Burgundy

May 4th, 2012
3:37 pm

I think obama is picking a topic that can divert away from the decay of America. Whats the point in encouraging college when there are no jobs? Job creation has been disasterous despite record spending by govt so he choses to create a “safe” platform.

I think its a safe bet that everyone on both sides agrees we want student loans to be manageable. Its how we make them manageable, but the REAL issue is the lack of private sector job growth for students who take the loans and giving them the ability to pay them off.

Ron Burgundy

May 4th, 2012
3:41 pm

You ever notice that the pres only gives these “no brainer” everyone agrees…no controversy speeches in swing states?

Guy has done more fundraisers then the past 5 pres combined….sad.

Peadawg

May 4th, 2012
3:48 pm

Wasn’t Obama threatening to veto a bill just like week that would keep interest from doubling?

Ron Burgundy

May 4th, 2012
4:01 pm

If Obama wanted to help graduating kids with debt he would get out of the way of the private sectors who want ot hire.

Jobs report today was pathetic and if based on overall population instead of those who are “actively seeking” work it would be even worse.

Richard Morgan

May 4th, 2012
4:27 pm

The question is why student loan interest is anywhere near their current or about to double amounts. The government borrows money at a close to zero interest rate. Why not enable the student loans to be at or close to these same rates. This is a public policy issue. Education is good for society and it needs to be affordable so it can be purchased. The government printing presses are printing money as if it has no value 24/7/365 right now, so why not do some public good by helping students afford a college education and the ability to pay back their student loans at their cost and not based on a much higher interest rate.

NBCT

May 4th, 2012
4:44 pm

@Ron – I like your last point The former point is, well, political.

Anything Obama would say right now could be construed one way or another. I like the fact that he is interested in student loans as this is a cancer that is growing out of control (the amount of it). Furthmnore you say,.. “the REAL issue is the lack of private sector job growth”. Without educated employees how will we fill those positions? So, in a way, Obama IS dealing with your issue.

carlosgvv

May 4th, 2012
4:46 pm

However this turns out, I’ll be amazed if Republicans in Congress fund this program by taxing the rich, as Obama wants. Republican lawmakers have a deep, abiding and fundamental commitment to the rich, and I’m guessing that under NO circumstances will they add on penny to the taxes the rich pay.

Ron Burgundy

May 4th, 2012
4:51 pm

NBCT – you like the fact that Obama doesnt want graduates to toil in debt? Wow…me too. I just don’t need Obama to go to a swing state and talk to students baout it….its kind of a given that he should be doing this. What I would like to see Obama do is address why despite speding trillions the unemployment is gotten MUCH worse since he took office.

I would like to understand why our govt report unemployment based on people looking for jobs and not people as an eligible population. Also, I would like for Obama to answer why disability claims are rising and thus take people off the count of population counting towards unemployment. I would like for the president to answer why states like north Dakota have record EMPLYMENT due to energy harvesting and he allows the fewst oil leases in decades.

I would like for obama to address the 4 dollar gas….you know the difficult situations instead of stumping on the obvious.

Ron Burgundy

May 4th, 2012
4:54 pm

carlosgvv…why not spend less instead of taxing the rich? Why do the rich ned to pay even more then they do now? Why is Obamas answer to everything taxing the wealthy? Why can govt not operaqte in the black on current tax revenues? Is govt already efficient and the only option is increasing revenues?

GSU Alum

May 4th, 2012
4:58 pm

Ncrt the point is Obama stumps in a swing state on a no brained stance. He doest want grads to toil in debt? Wow. How about the pres talk about why the unemployment reports show terrible growth despite all his “stimus”. Or maybe talk about why we are paying 4 dollar has meanwhile north Dakota is havi g great times due to energy.

As for taxing the rich why? Is the govt already so efficient tha the only alternative is to generate more revenues?

GSU Alum

May 4th, 2012
5:00 pm

Sorry for spelling

GSU Alum

May 4th, 2012
5:02 pm

Why does Obama vilify gas companies but talks little about rising tuition cost. Why not vilify the evit deans and professors of the world.

Jammer51

May 4th, 2012
5:03 pm

Gonna be tough paying off a 19K loan while flipping burgers because you have a degree in “International Conflict” instead of a degree in Science, Engineering, or Technology.

Atlanta Media Guy

May 4th, 2012
5:06 pm

The democrats wrote the bill so it would expire this summer, forcing the GOP to vote for something that never had to be an issue if the original bill had not had a sunset on it. Total campaign gamesmanship with an issue that is scaring the students and parents to death. We need policies that will stimulate the economy NOW! The sad thing is we’re in an election year so everything is on hold until after the election.

Lorraine Conley

May 4th, 2012
5:29 pm

Both Obama and his wife Michelle lied in Election 2008 as they never did have ANY student loan debts; (2:32) into this video Obama At LinkedIn Town Hall, September 26th, 201[1], Obama engages with us ” I went to school on scholarships and Michelle’s father paid for her education – http://www.therightscoop.com/question-at-obama-town-hall-would-you-please-raise-my-taxes/ (00:39:07) into this, Full length video: of Obama’s reply to “Would you please raise my taxes?”, – Live from Mountain View: LinkedIn Town Hall with President Obama http://blog.linkedin.com/2011/09/26/obama-town-hall-live/ – Election 2008, Michelle Obama claims her and Barack have empathy, her and Barack took out student loans and just paid them off 3 years ago – Michelle Obama speech Delaware part3 http://youtu.be/QT8pdbJB8bk – Barack Hussein Obama II, answer to the first question to Sway at MTV – Obama, “Look, this I can relate to. I went to college having to take out student loans, went to law school having to take out student loans. Michelle took out student loans.” – Barack Obama Answers Your Questions — Check Out The Full Interview Here! – Music, Celebrity, Artist… http://www.mtv.com/news/articles/1598409/barack-obama-answers-your-questions.jhtml

Thanks RIchard Morgan

May 4th, 2012
10:54 pm

What you said is exactly right. I couldn’t have said it better.
So glad YOU get it.
So sad others don’t.
But keep on preaching, brother. Maybe you’ll bang some sense into someone someday.

Teacher Reader

May 5th, 2012
12:48 am

When will the people taking the loans out have the responsibility. One of the things that I looked for in a major when I went to college was the kind of job that I’d be qualified to do vs. the cost. We have kids graduating with degrees such as poetry, fiction writing, and woman’s studies, with a huge debt to earning ratio. Whose fault is this? Is it the American taxpayer’s problem, or the person who chose that major with the limited earning potential?

College is not a right. If you want to go to college, than work and pay for it. I don’t want to work, so that you can go to college for free because you’re too lazy to work and go to school like I did. As I’ve already told my young son, I only pay for college degrees with job potential. If you want a degree in something frivolous, than you can work to pay for it.

Our young people want the government to provide everything for them, the education, car, McMansion, job, medical, and retirement. Who is going to pay for this? The “rich” could turn all of their assets over tomorrow and our debt still wouldn’t be paid off.

What happened to working hard for what you have and only spending less than you make? Our kids are being brain washed by their professors and don’t have the critical thinking skills to decide if what they are being taught makes any kind of sense. Also our kids aren’t being taught about communist countries and what it was like to really live in them, as our history curriculum only teaches what progressives want our kids to know.

Lee

May 5th, 2012
1:51 am

Of course, high school graduates could go out and get a full-time job and go to night school just as I and thousands of other college students did. And if you choose wisely, you could hire on with a company that has a tuition reimbursement program. Between the two, you could graduate with your degree(s) with zero debt.

I just don’t have much patience with those who want to sit back and let Uncle Sammy take care of them. Want to go to college but don’t want the debt, get a job already…

Dr. Craig Spinks/ Georgians for Educational Excellence

May 5th, 2012
3:17 am

Full-time workers who are attending school are being encouraged to borrow the maximum amounts to which they are qualified and to use them to pay mortgages, rents and other household expenses. Student loans is not a tuition-and-books-only emterprise. Many student loan counselors are the new mortgage-originators. Like their unscrupulous, mortgage-originating predecessors, these “counselors” need to be incarcerated

I love teaching. I hate what it is becoming...

May 5th, 2012
8:13 am

@Lorraine Conley “Both Obama and his wife Michelle lied in Election 2008 as they never did have ANY student loan debts; (2:32) into this video Obama At LinkedIn Town Hall, September 26th, 201[1], Obama engages with us ” I went to school on scholarships and Michelle’s father paid for her education –

Actually he said her father was able to SEND her to Harvard, which may or may not mean he paid her full way. He also said he went on “scholarship.” Well, so did I. A scholarship that gave me a few thousand towards my education – the rest I paid for with…. student loans! You can do both. Many scholarships do not pay the full cost of college, so people may also take out loans as well.

A Conservative Voice

May 5th, 2012
8:18 am

I see no problem whatsoever in lowering the interest rate on student loans. After all, we’re the richest country on earth…….what’s another trillion or two? I’m gonna tell you, did anyone watch Hannity a couple of nights ago when he had the “Occupy Wall Street” organizer on? He presents the best reason I know of to eliminate student loans entirely. The bloodsucker is using the funds for living expenses, and not going to school. This idiot should be locked up……why isn’t he? you there, ERIC HOLDER? Naw, I didn’t think so……you’re too busy lying about F&F.

Teacher Reader

May 5th, 2012
8:42 am

As others have noted, student loans are no longer just paying for college tuition, they are being used for all living expenses-rent, gas, car payments, food, medical, etc. as well as tuition. I know a person who is attending an on-line school who is well over $50,0000, not a U.S. Citizen (only here on a green card and is now back in Europe) and still getting the U.S. Government to give her money for student loans. She is over 50 years old and going to school to be an English teacher. There is little possibility that she will ever pay this money back, and tax payers will be footing this bill. I know of others like her.

I have no problem for student loans paying for college tuition, it’s the living expenses, and such that I have a problem with. Allowing students to graduate with liberal arts degrees $50,000 + in debt is ridiculous. Also the kids taking the loans should be able to do the math for themselves and decide if what they are about to do is a good value-something my 4 year old is able to discern quite well.

Ron Burgundy

May 5th, 2012
9:32 am

I think a study on irresponsible student loans should be done before asking the rich to pay more. Wait…we should do that with other govt issues too!

Ron Burgundy

May 5th, 2012
9:33 am

Hilarious how I am moderated cause I am not a liberal view

Fred ™

May 5th, 2012
10:17 am

It’s funny to read all the talk radio lies posted here by blithering idiots who lack the ability to think. The irony of this being an education blog on which they post their stupidity only adds to my amusement.

There is a HUGE collection of Republican bumper sticker slogans here and not one original thought, typical of Republicans.

GOP: The party of sheeple who can’t think for themselves, but CAN be trained to repeat slogans………. just as the Soviets or Germans could………

@Fred

May 5th, 2012
10:31 am

I’m not a Republican, but I find it funny that you’re slamming people for being sheep then throwing out the same old Democratic standard of “I don’t agree with you so I’m comparing you to the Nazis/Fascist/Soviets/whoever else I don’t like.” That doesn’t require much thought either.

carlosgvv

May 5th, 2012
10:34 am

Ron Burgandy, GSU Alum

Obama wants the rich to pay the same tax rate as the middle class. Why do you have a problem with that?

flipper

May 5th, 2012
1:56 pm

Let the rates go up until it’s not longer financially worth it in the long run to get a college degree. Then demand for college becomes so stifled that colleges can’t get qualified students, and they have to trim down on costs and reduce tuition or go out of business.

The problem is with the colleges who have thrown away billions on state-of-the art athletic facilities and dorm rooms that are more like a Club Med suite than a college dorm room. All of this luxury in college is ridiculous. Hold costs down and give the kids a square room with two twin bunks and a shared bathroom down the hall. If they want to work out, they can put on their sneakers and go for a run. Running is free. Or… they can buy themselves a $10 frisbee or soccer ball and head down to the open field… not the athletic complex with an indoor Olympic pool and a climbing wall… the field… the one in the back … behind the dorms. The college of course, would provide the mowing… or pay some students to do it.

If we all got back to what college is supposed to be about (learning) and stop trying to make it a four year drunken stint at a five star resort, we might not have this problem.

Old timer

May 5th, 2012
2:06 pm

GA could keep the cost down somewhat by not paying out so much money to MichaelAdams…UGA…. President. Ridiculous!

Old timer

May 5th, 2012
2:21 pm

Teacher Reader…AMEN!!
Don’t tell me the democrats don’t like the rich….Hollywood? GE? GM? Unions? Obama has been a huge failure as a leader. College students do not live poor like I did… In a dorm, lunchroom food, bike, no tv, etc…..but everyone was poor. It was fun. My neighbor’s daughter has a two year old BMW….an apartment, a dog……and has never worked. When she graduates, with a degree in social work/psychology she will never be able to pay her $50,0000. In loans…..

Dekalbite@Ron Burgandy

May 5th, 2012
4:59 pm

“What I would like to see Obama do is address why despite speeding trillions the unemployment is gotten MUCH worse since he took office.

Unemployment follows recession, and the beginning of the recession was December, 2007 (slowdown in the economy eventually produces unemployment).

By the time Obama became president, the effects of the recession were in full swing, including unemployment increases.

We technically left the recession in June, 2009 according to economists although this was an especially deep and lengthy recession, the worse since the Great Depression because of many factors (the proliferation of sub prime mortgages derivatives, budget deficits caused by huge tax cuts, unfunded wars, and an unfunded trillion dollar prescription program – all under President Bush).

Employment follows the end of recessions (until the recession has ended, employers don’t hire workers). That is exactly what is happening now. Unemployment is trending down.

Economics is a great class to take. Economics and finance should be requirements in high school and college BEFORE calculus classes. Few people will ever use calculus, but everybody needs to understand economics and finance. Sadly, academics do not see it this way. Most of them are not proficient in economics and finance either.

Ron Burgundy

May 5th, 2012
5:33 pm

I think the point of a stimulus is to get us out in a recovery. Pretty lame recover.

I like the comment saying the rich pay a lower rate the poor. Hilarious. This left blog is funny.

Fred ™

May 5th, 2012
5:51 pm

@Fred

May 5th, 2012
10:31 am

I’m not a Republican, but I find it funny that you’re slamming people for being sheep then throwing out the same old Democratic standard of “I don’t agree with you so I’m comparing you to the Nazis/Fascist/Soviets/whoever else I don’t like.” That doesn’t require much thought either.

Liar. You are too a Republican. If oyu weren’t you wouldn’t use the erroneous right wing talk radio “argument” and verbiage, the same old Democratic standard of “I don’t agree with you so I’m comparing you to the Nazis/Fascist/Soviets/whoever else I don’t like.”

HOWEVER, were you to study history a little, you would see that what I said was exactly correct. Dr. Josef Goebbels was the master of propaganda and if you were familiar with his works you would see how the right wing media uses them. you could also study Soviet Russia and see how they employed “secret police” to squash any dissent. Watch how the right wants to squash any dissent, loves to employ torture to get what they want, and strips us of our civil rights (Patriot Act.)

Your lies about me do not suppress the truth of my post.

Old timer

May 5th, 2012
5:51 pm

Ron…too true ….someone does not understand earned income and capital gains…simple economics

I love teaching. I hate what it is becoming...

May 5th, 2012
5:57 pm

@Ron “Hilarious how I am moderated cause I am not a liberal view”

Ron, I frequently end up in the great void of moderation as well… it seems very inconsistent, but I do not think it has anything to do with political affiliation since I am fairly left of center.

Public HS Teacher

May 5th, 2012
6:23 pm

Republicans are holding the college loan program hostage.

Obama wants to use taxes from the most wealthy (no one that reads this blog!) to help pay for this. Of course, the republicans would NEVER stand for this.

The republicans want to use healthcare money to pay for the college loan program. In other words, the republicans want the middle class to chose between health care and student loans for college.

When will the voters wake up and stop voting for republicans?

Redneck Convert (R--and proud of it)

May 5th, 2012
7:58 pm

Colledge graduate = Librul

Only the dumbest come away from colledge as Conservatives. That is, teachers and such.

So I don’t want my tax money going to pay for turning out little Karl Marxes. Sock the interest to these people. If grade school was good enough for my Daddy and Mama, it’s good enough for everybody else.

That’s my opinion and it’s very true.

redweather

May 5th, 2012
7:59 pm

@ Public HS Teacher: “The republicans want to use healthcare money to pay for the college loan program. In other words, the republicans want the middle class to chose between health care and student loans for college.

When will the voters wake up and stop voting for republicans?”

When greed becomes unpopular.

Guest of a Guest of a Guest

May 5th, 2012
8:38 pm

“Obama wants to use taxes from the most wealthy (no one that reads this blog!) to help pay for this.”

So you’re telling me all the conservatives who post barely intelligible comments here aren’t the multi-millionaires they claim to be? Surely there aren’t people so pathetic that they’d vote against their own interests just to appear to be part of a club that wouldn’t so much as hire them as landscapers. Or are there?

murphey

May 5th, 2012
8:48 pm

Isn’t the student loan situation just like the mortgage loan situation? In both cases people borrow too much money for upscale, name brand things and then expect those of us who chose less prestigious colleges and homes BECAUSE WE KNEW IT WAS FOOLISH TO TAKE ON SO MUCH DEBT to subsidize those who made those foolish decisions.

My son couldn’t afford to attend some of the colleges which offered him admission so we chose something that we could manage. And I think he will turn out just fine!

bullet

May 5th, 2012
10:15 pm

@Public HS Teacher
Since the Republicans have already passed the bill and Obama is threatening to veto it, doesn’t common sense tell you that Obama is the one holding it hostage?

Jayne

May 6th, 2012
7:18 am

I wish pressure would mount on colleges and universities to control tuition and provide more value. The run away cost structure of the university system as more and more cheap federal money flowed to students is the real issue here. We should demand better from our regents.

Tabitha

May 6th, 2012
7:21 am

Its always about subsidizing someone in Obmanomics. Government’ job is to subsidize some and punish others. Of course the decision for who is worhy of a subsidy and who should pay is a political decision.
The ideas behind Obamanomics have been tried for a couple of centuries and they do not work.

teacher

May 6th, 2012
8:17 am

College has become an entitlement to kids. They have no idea what it takes to truly get there or the work to stay, but just want the experience. The HOPE, while a good idea, in theory, has done a lot to hurt education in the state and has raised prices that have created more need for loans. Loans should not be necessary for the majority of people desiring to go to college, but they have become because of peoples’ lack of planning. Kids are given extravagant birthday parties from the moment they are an embryo to the time they get the nice car. There are no limits placed on what people will give their kids and then there is no money to pay for college. Hey, just get a loan. This is how our society has gotten into so much financial ruin. We just want, want, want and have no limits on how we should really use our money.
This issue has become politicized because the president et al have made it this way, to garner votes from this lost generation of non-thinkers, who just want more stuff like this ugly old school loan they were forced into.

Meanwhile...

May 6th, 2012
9:29 am

Amazing how anytime Obama say anything remotely along the lines of “This should be a no-brainer” it translates into “punish success and reward failure”!!

Regarding the plan to extend a freeze on student loan interest rates for another year — how the extension is paid for? Likely, yet again the plan from the Dems is — it will be paid for by taking aim at certain taxpayers who make more than $250,000 per year for a married couple and $200,000 for an individual….

Mary Elizabeth

May 6th, 2012
10:55 am

I want to mention that at 11:00 am, in about 10 minutes, on Booknotes, on C-Span 2, the Harvard professor of economics and philosphy, Michael Sandel, author of “What Money Can’t Buy: The Moral LImits of Markets,” will be interviewed for an hour regarding the takeover of the market place in every phase of American life. His contention is that this is unhealthy because the market does not belong in every area of our lives – including in education. C-Span 2 is on channel 104 (Comcast) in my area of Atlanta

Meanwhile...

May 6th, 2012
11:08 am

“I love teaching” and “Ron”

ditto to ending up in the great void of moderation as well… guess I’ll stick with Bookman’s blog…

bootney farnsworth

May 6th, 2012
11:58 am

if congress really gives a damn – knowing full well they don’t – they’d stop mucking with it.

nearly every major problem in education these days stems from political meddling / social engineering

To Teacher

May 6th, 2012
1:04 pm

YOu wrote “College has become an entitlement to kids. They have no idea what it takes to truly get there or the work to stay, but just want the experience.”
All of us were once kids. No one can hunaly know “what it takes to get there or the work to stay.”
We are mostly adults on this blog. it is very easy for adults to think of ourselves as mature as we are now and project that level of maturity on ourselves as teenagers. We weren’t.
I wish you would stop criticizing children so harshly.
You and I had it mus easier. College was much less expensive then and we didn’t have to compete in a global marketplace for a spot in college. In my day, I went to school in my home state and we have several kids from up North to come to my Southern school. We didn’t have to compete with the influx of highly-motivated, highly-intelligent imports from India and China for a spot in a local state university.
Until anyone lives through an experience, they cannot possibly know what it takes to get in or know what it takes to stay in.
Hindsight is 20/20.
Kids have no hindsight because they haven’t Been there. We have.
Please remember that.

To Redneck

May 6th, 2012
1:07 pm

I am a redneck too but I have an education.
Education is not just for the liberal elitists and the conversative greedy. An education is for everyone who needs to work to earn a living.
The days of earning a living with ahihg school diploma-only are OVER.