Students seek help on scheduled interest rate hike
April 4, 2012
A recent report from the National Association of Consumer Bankruptcy Attorneys (NACBA) revealed that college seniors who graduated with student loans in 2010 owed an average of $25,250. In addition, 81 percent of bankruptcy lawyers say they have witnessed the number of individuals with college loan debt increasing either "significantly" or "somewhat" over the past few years.
While paying college loan debt is already a challenge for some borrowers, the problem is expected to get even worse, as interest rates on subsidized Stafford student loans are scheduled to nearly double from 3.4 percent to 6.8 percent if Congress doesn't act by July 1. The increase would affect almost 8 million borrowers.
According to the U.S. Public Interest Research Group, if Congress does nothing, the average subsidized Stafford loan borrower would have $2,800 in increased student loan debt over a 10-year repayment term.
In order to get Congress to react, dozens of college students from around the country recently delivered more than 130,000 letters to lawmakers, urging a new plan.
"I don't feel that I can be successful with this overwhelming debt strangling me," college freshman Tyler Dowden told CNN.com. "I can't really breathe because whenever I look around, whenever I look at my future or try to make goals for my future, I really can't. I have to take my massive debt into consideration."
Two bills have been introduced to keep the interest rate at the current rate of 3.4 percent. The Student Loan Affordability Act (S.2051/ H.R.3826) is sponsored by Senator Jack Reed (D- Rhode Island) and Representative Joe Courtney (D-Connecticut).
"A college education is an important investment for both individuals and America's global competitiveness. It is in our national interest to try and keep student loan rates low," said Senator Reed. "As the price of college continues to increase, more students are forced to take out bigger loans to pay for their education. Congress has a July 1st deadline to pass this legislation and help millions of students nationwide."
The lawmakers say that student loans should be an investment that pays off, and can be reasonably paid off.
It's known that a college degree can significantly boost one's earning potential. According to the U.S. Bureau of Labor Statistics, in 2011, individuals with a bachelor's degree made an average of $1,053 per week, compared to $768 per week for those with an associate degree, $719 per week for those with some college (but no degree) and $638 per week for those with a high school diploma.
Luckily, moms who want to pursue a college education without incurring a large amount of debt have several options. Grants for parents, scholarships for mothers and single mother scholarships can help student parents finance their college education without loans.
