Bonamici Working to Stop Student Loan Interest Rate Hike - Interest Rates Set to Double in July
Washington, D.C. – Congresswoman Suzanne Bonamici (D-OR) today announced her opposition to H.R. 1911, legislation that would allow student loan interest rates to rise as high as 8.5 percent based on a variable formula linked to the 10 year Treasury Note. Without action, the current interest rate of 3.4 percent will double July 1 to 6.8 percent. Bonamici is pushing for alternative legislation, The Student Loan Relief Act, H.R. 1595, to maintain the 3.4 percent rate for two years to provide time for a thoughtful, comprehensive discussion of the student loan debt crisis.
“Allowing interest rates to rise as high as 8.5 percent will crush students and families who are already drowning in student debt,” said Rep. Bonamici. “Congress needs to pass comprehensive legislation to address the growing cost of college and skyrocketing education debt, but in the meantime we should maintain the current interest rate of 3.4 percent.”
Under H.R. 1911, interest rates on an individual’s federal student loans will be reset every year. As a result, loans taken out today by a college freshman would need to be paid back at the 2017 rate, which is projected to be more than double today’s rate.
A study by the nonpartisan Congressional Research Service found that students who borrow the maximum amount of subsidized Stafford loans over five years would pay $10,109 in interest payments under H.R. 1911, $4,174 if rates were kept at 3.4 percent, or $8,808 if rates are allowed to double to 6.8 percent in July.
Students who borrow the maximum amount of subsidized Stafford Loans and additional unsubsidized Stafford loans over five years would pay $14,430 in interest under the H.R. 1911, $12,598 if subsidized loans were allowed to double to in July, or $7,965 if rates don’t double.
Parents and graduate students would also pay more under the bill considered today. For instance, a parent who borrows the maximum amount for their child over five years would face $35,848 in interest payments under the Republican bill, more than the $27,956 under current law.