Durbin: Congress Must Take Action to Prevent Interest Rates on Federal Student Loans from Doubling
[WASHINGTON, D.C.] - As President Barack Obama travels to college campuses across the country speaking about the growing student loan debt crisis, U.S. Senator Dick Durbin (D-IL) spoke on the Senate floor today to urge Congress to pass legislation preventing student interest rates from doubling for more than 7.4 million students on July 1st, 2012. Durbin has co-sponsored the Stop the Student Loan Interest Rate Hike Act of 2012, introduced today, which would maintain the current interest rates of 3.4 percent, and prevent a hike to 6.8 percent scheduled for July 1st. The extension is paid for by closing a tax loophole used by some professional service businesses to avoid employment taxes.
“Current college graduates have low, affordable interest rates on their federal student loans. But next year’s graduates may not be so lucky. That’s because current student loan interest rates, set to double for 7.4 million students across the country on the first of July, will go up to 6.8% unless Congress acts. Every week in my office, we hear from students who would be directly affected by interest rate increases. Making college affordable shouldn’t be partisan. It affects everyone. An educated workforce will make us a stronger nation, and keeping debt levels low and manageable for college graduates is essential,” Durbin said.
In Illinois, more than 365,000 borrowers would see the interest rates on their federal student loans double unless Congress acts. However, if current interest rates are extended, each borrower in Illinois will save more than a thousand dollars over their lifetime. Across the state, borrowers will save a total of more than $387,000.
Durbin also addressed the role of for-profit colleges in exacerbating the growing student loan debt problem by pushing students toward risky, higher-interest, private student loans. Durbin has introduced legislation, the Fairness for Struggling Students Act, to help address the growing student loan debt crisis by treating privately issued student loans in bankruptcy the same as other types of private debt. In his remarks, Durbin shared the story of George Jacobs, a resident of Chicago, Illinois. Jacobs went to a school owned by the Career Education Corporation, a for-profit college, and is now saddled with more than $142,000 in student loan debt.
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