WASHINGTON — “College students graduate with more average debt than ever before,” Institute for America’s Future President Robert Borosage noted today. “It is simply unconscionable that House Republican leaders want to sock them with higher interest rates and greater risk. This penalizes the sons and daughters of working families who are forced to take on debt in order to gain a higher education. Cutting taxes on millionaires while loading greater debt onto young people just starting out on their careers makes no sense at all.”
House Republicans late last week introduced the College Access and Opportunity Act, legislation that will stick college graduates with higher and variable interest rates on university loans. This will load more costs onto young students, even though student debt levels have doubled in the last ten years, and are likely to rise even higher with public college tuition rates soaring — up 14 percent this past year alone.
The government helps students pay for college by allowing them to consolidate their student loans with a fixed interest rate. The College Access and Opportunity Act would force an average of $5,500 more in variable interest payments on borrowers, according to the nonpartisan Congressional Research Service.
The Institute for America’s Future found that nearly 60 percent of borrowers that consolidate their loans are under the age of 35 and a quarter make less than $35,000 a year. Nearly 40 percent of borrowers hold off on buying a house because of student loan debt. These are the successful sons and daughters of working families — moderate and low income families that can’t afford to pay all the costs of a college education and are forced to take on debt.
Statement of Robert Borosage
“Having generated record deficits with their tax cuts skewed to corporations and the wealthy, House Republicans are now trying to figure out who will pick up the tab. But it seems particularly obscene to single out young men and women at the start of their careers and hit them with higher and variable interest rates on school loans. Why not end the subsidy to banks and have the government loan students the money directly? Surely the banking industry is better able to bear the loss than college graduates struggling to find affordable housing while paying off student loans. But of course, unlike the financial industry, young people don’t help pay for the party of these legislators.
“This gives lie to all the election year rhetoric about hard work, opportunity and responsibility. Republicans gave the wealthiest Americans tax breaks that they do not need and now want young people of modest means to help pay the cost. With the White House refusing to lift grant levels for government scholarships, more and more students have no choice but to take out loans to pay for college. Their willingness to do so should be rewarded, not punished. Nearly 40 percent of borrowers already hold off on buying a house because of their student loans, and now the radical conservatives that dominate Congress want to add to the $17,000 that the typical borrower already owes.
“This must be stopped. President Bush tried to increase student debt two years ago and failed. House Republicans should know that this legislation will outrage young people and their families who are struggling to pay for the college education so vital in today’s economy.”