U.S. Senator Richard Blumenthal said Monday that congressional negotiators are “on the cusp” of agreeing on compromise legislation that would prevent interest rates on government-backed student loans from doubling on July 1.
Blumenthal
Standing beside a chart that labeled the student loan issue a “ticking time bomb” with just five days left, Blumenthal did not say exactly what the negotiators are considering as a means of paying for the $6 billion cost of keeping those interest rates at their current level for some 7.4 million college students across the country
But at a news conference in Connecticut’s capital city Monday, Blumenthal, along with U.S. Reps. Joe Courtney and Rosa DeLauro, said conservative Republicans in Washington are intentionally blocking legislation that would keep interest rates on federal Stafford Student Loans at 3.4 percent.
A current law setting that interest rate is set to expire on Sunday, meaning interest rates would double to 6.8 percent under legislation passed in 2007.
Blumenthal said those blocking efforts “have done damage to our democracy” and said that allowing the rates to double would amount to a “stealth tax” on students who depend on federal aid.
DeLauro said that access to a college education has been a key factor in the development of the middle class after World War II.
“Without college, there is no middle-class America,” said DeLauro, D-New Haven. “They [Republicans] had no intention of making it easier for kids to go to school.”
But the actual difference in student loan payments attributable to the interest rate rising could be fairly small, and certainly don’t mean that student loan payments would double starting Sunday.
According to a report from the U.S. Department of Education (PDF, Page 1), the average cumulative Stafford student loan debt among students in 2007-08 (the most recent year for which such statistics are available) was about $10,300.
Assuming the loans are paid off in 10 years, a monthly payment at current 3.4 percent interest would amount to about $101.37. If the interest rate were doubled, to 6.8 percent, the monthly payment would increase to about $118.53–a difference of about $17 per month.
Even if a student were to take out the maximum allowable amount of Stafford loan debt, $57,000 for an independent undergraduate student, the payments would increase by about $95 per month.
For graduate students, the maximum amount of allowable Stafford loan debt is $138,000. The change in monthly payments if the interest rate were to rise: about $230 per month.
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3 Responses to Reps., Blumenthal Call on Congress to Pass Student Loan Bill
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Talk about a stupid fake crisis. On a $25,000 loan which is larger than the average student loan (near 18,000) we are talking about six dollars a month.
That’s right, this whole fake issue is about paying an addition $6.
Only an idiot like Blumenthal thinks this will damage our democracy.
When it says “… prevent interest rates on government-backed student loans from doubling …”, what is meant is the interest rates going back to where they were. Keeping the at the 3.4% interest rate adds to monies our government doesn’t have (notice nearly $16,000,000,000 deficit), so it will be another subsidy by the taxpayers. And what does this all accomplish? Saving some (only the ones that qualify) of the students between $7 and $10/month
When you hear “… Blumenthal said those blocking efforts “have done damage to our democracy” and said that allowing the rates to double would amount to a “stealth tax” on students who depend on federal aid…” is baloney — clearly he, as a Democrat, are not willing to do what it takes to get this through. The Democrats don’t like how the cost would be offset, so instead of negotiating to get it done, our (very) Junior Senator says that the GOP is blocking it.
All this effort expended to make sure a small percentage of student loans don’t increase by from $7 – $10 per month. Doesn’t this joker have anything better to do? How about getting out of the way so that the private market can start recovering!
The truly “smart” students & their parents will not touch a loan at 6.8% or 3.4%. Let the richly endowed colleges pay for the geniuses they want. The rest will seek out small private schools that are affordable.