Just days before the interest rate on new federally subsidized student loans was set to double, the Senate came to a bipartisan agreement that freezes the rate at 3.4 percent for another year, and Congress passed it June 29 as an amendment to a transportation bill.
Democrats had consistently affirmed that students should not be burdened by the additional debt they would incur through a doubling of the rate. As the deadline drew near, Republicans also came around to support a freeze. The issue that was polarizing, however, was how to pay the $6 billion price tag of a rate freeze.
In the end, senators found the money by making changes in the federal pension program and by shifting savings created by limiting the number of years the federal government will pay the interest on loans while students are in school.
"Congress took an important step today in heeding President Obama's call to action and coming to an agreement that keeps student loan interest rates manageable for many college students," says AFT president Randi Weingarten. "However, it is unfortunate that the Republicans' partisan games allowed student loan rates to come perilously close to doubling—an unconscionable increase when today's graduates already are being crushed under record debt—and that some students will incur even more debt as a result of this eleventh-hour agreement. We should be expanding opportunities for all students to afford college, not saddling them with even more debt as they begin their careers and their adult lives. Higher education cannot become a luxury for a few—it must be affordable and accessible to all.
"This agreement is a step forward, but it is not a clear victory for all students seeking to avoid massive post-graduation debt. By limiting the amount of time that students can receive subsidized federal loans to six years for a bachelor's degree and three years for an associate degree, Congress is assigning a greater debt burden to students with families, jobs or other special circumstances that may prevent them from graduating as quickly as their peers. Penalizing one group of students to help another is wrong, and AFT members do not want nontraditional students to be shut out of education because of the ballooning price tag.
"I thank President Obama for his leadership and Congress for taking a positive step toward preventing higher education costs from skyrocketing, but our elected leaders have much work yet to do to make higher education truly affordable and accessible for all students." [AFT press release, Barbara McKenna, Jennifer Scully]
June 29, 2012