Unless Congress acts before July 30, the interest rate for federally subsidized Stafford loans will increase from 3.4 percent to 6.8 percent, potentially increasing the debt load for over 6,000 Georgetown undergraduate and graduate students.
This Tuesday, college student leaders delivered 130,000 letters to congresspeople in protest of the coming rate increase. At the rally, students criticized representatives for protecting the interests of other constituencies above those of students, emphasizing that national student debt passed the trillion-dollar mark earlier this year.
At the rally, students explained how the increasing the rate would affect their futures. “I will be put back into buying a house and saving up for my expenses later on in life, and life, as we know, is very unexpected,” said Tyler Dowden, a freshman at Northern Arizona University. “Adding that variable definitely limits my ability to be successful.”
When Democrats took control of Congress in 2007, they lowered the rate of subsidized Stafford loans to half that of unsubsidized Stafford loans. They paid for the lower rate by switching from the guaranteed student loan program to the direct student loan program, but the savings were temporary. John Kline (R-Minn.), chairman of the House Committee on Education and the Workforce, said in a statement that the coming hike is the “result of a ticking time bomb set by Democrats five years ago…simply calling for more of the same is a disservice to students and taxpayers.”
Stafford loans are offered on the full faith and credit of the United States government and, thus, are offered at a lower interest rate than they would be privately. To receive Stafford loans, students must meet rigorous need requirements. Loans are not expected to be paid back while the student is enrolled in college or for a six-month grace period afterward. The federal government pays the interest for the period that the student is in college, not practiced for unsubsidized loans.
Georgetown University College Democrats did not participate in the national letter-writing campaign this week. “We are in the midst of organizing around this letter writing campaign next week,” College Democrats communication director Joshua Zeitlin (COL ’14) wrote in an email. Georgetown University College Republicans did not respond to a request for comment.
According to figures obtained from the Office of Student Financial Services, 6,918 Georgetown students borrowed a total of $47,541,615 in subsidized Stafford loans for the 2010-2011 academic year, most of whom were graduate students. For that year alone, 2,163 undergraduates borrowed a total of $8,970,934 for an average loan of $4,100.
Georgetown students receiving financial aid graduate with an average of only $17,000 in student debt. The higher rate would cost them an additional $3,400 over ten years.
The University has made lobbying for Congress to extend the lower interest rate its highest priority.
“We have been very clear that we do want members of Congress to find a way to extend the 3.4 percent interest rate,” Vice President of Federal Relations Scott Fleming said. “It is, right at the moment, the most significant thing that is in play.” He went on to say that the University will be closely watching the House as it begins debating the budget resolutions this Wednesday and Thursday.
The contentious budget does not include an extension of the lower rate, but, according to Fleming, liberal counterproposals, such as the one submitted by the Congressional Black Caucus, extend the rate for at least a year. Other Democratic proposals make the 3.4-percent rate permanent.
However, Fleming expressed doubt that a budget would be passed by both houses of Congress before the current bill funding the government expires. “It’s hard to envision in this environment of actually getting an appropriations bill done by September 30,” Fleming said. “Typically, we should expect a continuing resolution.”
Fleming is also working with other universities and “various higher education associations,” and even though the District of Columbia only has one nonvoting delegate to Congress, Fleming has been exerting influence in other ways. In addition to encouraging students to reach out to their representatives in Congress, Fleming uses the reputation of the University as a tool.
“We’ve got a lot of alumni members of Congress,” he said. “I haven’t been shy about reaching out to them, and I won’t be with this one.”