Miliante,of Brooklyn,N.Y.,a junior at George Washington University,is among the 7.4 million college students across the country who have amassed $1 trillion in debt.
If that isn’t enough,students now face the possibility that interest rates on federal loans will double from 3.4 percent to 6.8 percent for the 2012-2013 academic year.
Congress has until July 1 to decide about interest rates on the subsidized Stafford loan, a federal loan awarded to students based on financial need.
“I think the hardest thing is trying to find the loans,” Miliante said. “There is such a large gap between my financial-aid package and my actual amount that I have to pay for tuition. I need private loans as well as Stafford loans and,honestly,the Stafford loan and any of those government loans isn’t enough.”
If the interest rates double,most students will owe $1,000 more each year.
“We can’t afford the $1,000 interest rate going up,” Tiffany Loftin,vice president of the U.S. Student Association,said. “That’s rent for somebody,that’s a computer cost for somebody – books for a semester,travel to and from campus. That’s a bunch of things students have to pay for,and that’s a lot of money for an 18,17,or 16-year-old to take out before they go to school.”
In a study,the Center for American Progress found that,since the recession,the total amount of student loans has risen 8 percent per year on average at the same time that mortgage and credit card debt have declined.
Economic experts fear that with the increase in federal loan interest rates many students will turn to risky private lenders who will market very low introductory interest rates to students who don’t understand that the rates are not fixed.
Loftin,a recent graduate of University of California,Santa Cruz spoke at a rally at the Capitol attended by hundreds of college students from across the country to mark Student Debt Day. Students lobbied members of Congress to ask them to prevent the interest rate from increasing.
“The hope is here,the voices of the students will be the only change on the interest rates” Sen. Jack Reed,D-R.I.,said at the rally as he pointed to the students behind him.
Sen. Tom Harkin,D-Iowa,told the students it will be difficult to work with Republicans to find a solution for the interest rate.
Democrats have proposed taxing high-income earners to finance the interest rate cut,and Republicans have proposed eliminating a preventive health-care program.
“It’s because they want to defeat President Obama that they are playing this game with students and families around the country,” Harkin said. “They want the interest rates to increase so they can blame Obama.”
The Senate considered the interest rate bill in May,but even with support from both Democrats and Republicans,not enough senators voted to begin debate.
Though students have loan debt,many believe they will fare better in the job market because of their degrees.
“Despite the high debt that I have incurred,I have no regrets” Kristofer Dowdell,20,of Landover,Md.,a junior at Frostburg State University,said “I think my college education will help give me more opportunities than if I didn’t go to college.”
Reach Reporter Kathryn Kenny at [email protected] or 202-326-9861. SHFWire stories are free to any news organization that gives the reporter a byline and credits the SHFWire.