Doubling the student loan interest rate has consequences
With the looming threat of a doubling in the interest rate for student loans, students might feel powerless. But they should still voice their opposition to their representatives in Washington, D.C.
Last year, Congress voted to extend the current student loan interest rate until July 1 of this year. Now, without legislative action, the rate will double from 3.4 percent to 6.8 percent on July 1.
More than 7 million students — including 28 percent of UNC students — would be affected by the increase in interest rates, which would make a typical four-year loan about $3,000 more expensive.
North Carolina’s senators and representatives need to understand the widespread and long-term effects of raising these interest rates. That understanding can only happen through the student community voicing its needs to legislators.
Capitol Hill needs to realize that education is not merely an expense, but an investment in the future. Both the UNC system’s recently approved five-year strategic plan and President Barack Obama’s plan for education note the importance of creating a capable and adaptable work force.
Without accessible higher education, the country’s workers will not be able to perform the jobs of the future.
Students should also inform Congress of the true cost of extending the interest rate reductions.
Last week, Republicans sent a letter to the president stating that the cost of keeping interest rates the same last year was about $6 billion.
But they failed to mention that this cost was offset. A 2012 House bill included plans to offset this cost by cutting spending in other areas.
With the number of students defaulting on their loans up about 30 percent in the last five years, doubling the interest rate would be disastrous.