President calls for extending lower interests on student loans to combat rising debt burden

For Immediate Release

Statement of Rich Williams, Higher Education Advocate for U.S. PIRG, on the President’s call for extending lower interests on student loans to combat rising debt burden.

Washington, D.C. – President Obama spoke today at the University of North Carolina on the importance of higher education and his support for a proposal to stop student loan interest rates from doubling on July 1st.

“We applaud President Obama for recognizing the severity of the growing student debt crisis in this country.

“Rising college costs, tight family finances and uncertain job prospects pack a triple whammy for student borrowers when they graduate.  Stopping student loan interest rates from doubling is a common sense proposal that has received support from across the political spectrum.

“Subsidized Stafford loans are provided to almost 7.5 million low and moderate-income students each year and do not accumulate interest while the borrower is in school.  If Congress does nothing, then beginning on July 1st, interest rates on these loans will double from 3.4% to 6.8% on new loans.

“In the event that interest rates are allowed to double, the average subsidized Stafford loan borrower would have $2,800 in increased student loan debt over a 10-year repayment term.  Borrowers who assume the maximum $23,000 in subsidized student loans will see their interest balloon to about an additional $5,000 over a 10-year repayment period and $11,000 over 20 years.

“This is a big deal for students.  Even as they are starting final exams on many campuses, students in more than two dozen cities are hosting ‘watch parties’ to listen to what the President is saying and then writing to Congress urging them to act to prevent the doubling of the interest rate.”