Over two-thirds of college students graduate with debt, with the average burden more than $26,000. This year, the nation's student debt crisis threatens to become even worse.
On July 1, 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, a rate not seen since 2007. At a time of unprecedented levels of student borrowing -- student debt in the United States has more than tripled in the last decade to over $1 trillion today -- Congress should support young Americans who are investing in their future by helping to keep the debt down.
Congress missed its chance by failing to pass legislation to block the rate increase that hit Monday. If left unchanged, the higher rate will harm the students who take out new Stafford loans for the coming school year. The effects of the increase could particularly affect Pennsylvania college students, who are heavy borrowers; they accrue nearly $30,000 in debt on average, more than students in all but one state.
Lawmakers largely agree on the need to reform interest rates but have been unable to settle on the details, with more than half a dozen plans introduced in Congress. Even though July 1 has passed, Congress still has a chance to reduce the subsidized loan interest rate after it returns from its July 4 recess. One Democratic-led bill to be considered in the Senate on July 10 would do just that, reinstating a 3.4 percent interest rate on subsidized Stafford loans for an additional year while Congress negotiates a permanent solution.
Congress should put students above politics and quickly roll back the interest rate before students finalize their loan contracts this summer. Swift action now should also 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.