Congress
is scheduled to vote on a proposal that if passed will cut student
interest rates in half, saving lower and middle-income borrowers $4,420
over the life of their loans, according to a new report by Ohio PIRG.
In
2004-5 more than 5.5 million undergraduate students took out subsidized
Stafford loans at an interest rate of 6.8%. If this proposal is passed,
that interest rate will be lowered over the next five years, until it
is cut in half to 3.4% starting in 2011.
“Given
the rising student debt burden, these lower interest payments will
present working-and middle-class students with real savings,” said
Maggie Abbulone, Public Interest Associate for Ohio PIRG.
Here
in Ohio, this issue would have a tremendous impact on our large student
population. In 2004-5, 173,312 Ohio students at 4-year colleges took
out subsidized Stafford loans. The average borrower graduated with
$13,495 in loan debt, just from this particular type of loan.
If
the House passes this proposal, the average 4-year college student in
Ohio starting school in 2007 would save $2,230 over the life of his or
her loans. Once this interest rate cut is fully phased in, students
starting school in 2011 will save $4,320 over the life of his or her
loans. That is nearly 1/3 of what Ohio graduates accrue in debt over
their 4 years.
The
Ohio Education Association (OEA) president Gary Allen stated, “this
proposal would afford more lower and middle-income Ohio students the
access to a higher education, which the OEA supports as an essential
part of the education process for our children. We believe this is
invaluable tool for career preparation in the 21 st century.”
“Lowering
interest rates on loans is a great first step towards providing
students and families with a more affordable college education,” said
Abbulone. “We call on Representative Deborah Pryce to support this
policy and for Congress to continue helping students pay for college by
increasing need-based federal student aid and by passing broad
protections for student borrowers, such as limits on the percent of
income that can be required for student loan repayment.”
To get a better idea of how this proposal would affect students here in Columbus, take a look at the chart below.
