More than two-thirds of U.S. college students graduate with loan debt; the average burden is more than $26,000. Now, the nation’s student debt crisis threatens to become even worse.
Last Monday, the interest rate on new, federally subsidized Stafford loans, which serve students with demonstrated financial need, jumped from 3.4 percent to 6.8 percent. That’s the highest rate since 2007.
At a time of unprecedented levels of student borrowing — student debt has more than tripled in the past decade, to more than $1 trillion today — Congress should support young Americans who are investing in their future by helping to keep debt down.
Lawmakers missed their chance by failing to pass legislation that would have blocked the rate increase. If it is left unchanged, the higher rate will harm students who take out new Stafford loans for the coming school year.
Members of Congress agree on the need to reform interest rates. But they have been unable to settle on a plan. Congress will have the opportunity to reduce the subsidized loan interest rate after it returns from its July 4 recess. A Democratic-sponsored bill before the Senate would reinstate the 3.4 percent interest rate on subsidized Stafford loans for another year while Congress negotiates a permanent solution.
Congress’ inaction is baffling, but there is no justification for further delay. Lawmakers should put students above politics and promptly roll back the interest rate before students sign their loan contracts this summer.
Swift action now should be coupled with a serious, bipartisan effort over the next year to overhaul the loan programs on which millions of students — and the nation’s future — depend.