NOLA Defender: Student Loan Rates Set to Double, Landrieu Pushes Back
School is out for the summer, but Congress has a crucial exam on student loans. Sen. Mary Landrieu released a statement this week declaring that she was going to fight a set hike in subsidized student loan rates, doubling the rate of interest and potentially costing university students thousands more a year.
On July 1, interest rates on government-backed student loans are set to double from 3.4 percent to 6.8 percent. Congress has so far been unable to act, but officials in the Beltway said there is a chance a deal could be brokered following next week's July 4 recess. Along with 37 other senators Landrieu was a co-sponsor of the Keep Student Loans Affordable. The proposed law, which was rushed out Thursday, would extend the current 3.4 percent rate for one year if passed.
As college funds are continuously cut, the schools are forced to find ways to pay for the discrepancies, and this often comes in the form of rising costs for students, including but not limited to tuition. That being said, the fight for student loan costs, and how they are subsidized, can make or break a student's career, not to mention the student's ability to pay the bill back years later.
In Louisiana, average student loan debt is now $22,921, and nationally, student debt loan debt exceeds $1 trillion and outranks credit card debt. And with the recent announcement that rates are set to double it would cost students (those with federally subsidized Stafford loans) $1,000 more each year, on top of those other rising costs. The skyrocketing rates could affect more than 83,000 Louisiana students, Landrieu said.
"The federal government should not be making a profit on the backs of students. This increasing debt poses a potential risk to the economy," Landrieu said in a statement. "When people shoulder heavier debt, they delay purchasing a home, buying a car, starting a family or a business and saving for retirement."
Last year, the federal government made $50 billion on student loans, according to Landrieu's figures.
The Baton Rouge Area Chamber recently released a report that said that Louisiana funds its higher education institutions less than other Southern states, and that since 2009, the state has consistently decreased funding. As a result, even LSU's total per-pupil funding and self-generated funding from tuition and fees is lower than other top public research universities in the South, and the school is also funded below its peer universities. If these costs were to be passed on to students, the financial burden could keep Louisiana students, otherwise capable of competing scholastically, out of a University environment.
"If we want to stay competitive in this global age, we must keep college affordable for students and their families. This is one of the smartest investments we can make. Having a quality, higher education is part of the American dream and an important value to many families in Louisiana," Sen. Landrieu said. "We cannot allow the rates on these loans to double."