for Immediate Release
Washington, D.C. – With the student loan interest rate about to double this July, President Obama proposed to halt the rate hike in his FY 2012 budget released today.
“In this economy, the last thing we should do is double the interest rates on student loans. Graduates already face high debt levels made worse by an uncertain job market,” said Rich Williams, Higher Education Advocate for U.S. PIRG. “Students and families need what the President offers in this budget, which is to keep interest rates low and provide more Pell Grant funding for students.”
Pell Grants are the country’s corner stone financial aid program, providing scholarship aid to nearly 10 million low-income students annually. The President’s budget proposes maintaining the funding required to increase the Pell Grant maximum from $5,550 to $5,635 in the 2013-14 school year and proposes measures to ensure the maximum Pell Grant through the 2014-15 academic year.
Subsidized Stafford loans are provided to almost 8 million low and moderate-income students each year and do not accumulate interest while the borrower is in school. This July interest rates on these loans will double from 3.4% to 6.8%. This increase will cost the average borrower $2,800 in additional interest and about an additional $5,000 for those borrowing the maximum $23,000 over a 10-year repayment period. President Obama proposes to pay for this with money outside of current education funding so that valuable student aid programs are not cut.
Work Study programs allow students to pitch in on campus and in the community, while earning grant aid to pay for their education. Doubling the amount of work-study jobs in five years, as proposed by the President, starting with a $150 million increase, enables more needy students to work and support their academics at the same time.
The American Opportunity Tax Credit provides families up to $10,000 of credit per student over four years of college. The credit is partially refundable which provides families with low or no tax liability access to the credit. The President proposes making this tax credit permanent.