May 31, 2013

DCCC Places Ads on College Campuses as Republicans Let Student Loan Rates Skyrocket

The Democratic Congressional Campaign Committee today is launching paid advertising in six college newspapers to alert students that their member of Congress is poised to allow their student loan rates to double by the end of June. The average college graduate already leaves school with $26,000 in student loan debt.

Instead of solving the problem of skyrocketing rates, House Republicans voted last week for the “Students Pay More Act,” putting a bigger burden on the backs of indebted college graduates. As the Associated Press has reported, under the House Republicans’ plan, “student loan rates could steadily climb and cost students more over the long haul.” 

The ads will run in print and online over the coming weeks in the following newspapers, which are publishing summer editions:

  • University of Minnesota (Congressman John Kline, MN-02)
  • California State San Bernardino (Congressman Gary Miller, CA-31)
  • Clark College (Congresswoman Jaime Herrera Beutler, WA-03)
  • Florida State University (Congressman Steve Southerland, FL-02)
  • University of Illinois, Champaign-Urbana (Congressman Rodney Davis, IL-13)
  • University of Nevada, Las Vegas (Congressman Joe Heck, NV-03)

“This should be a wakeup call for every student in America – House Republicans are on a path to double your interest rates,” said Emily Bittner of the Democratic Congressional Campaign Committee. “College students absolutely need to know that their representatives are about to make school more expensive, even while they’re subsidizing Big Oil companies to the tune of billions of dollars a year. For the umpteenth time, House Republicans are ignoring the needs of middle class families and standing with corporate special interests – and we urge all these students to sign our petition to keep loan rates low.”

BACKGROUND

The Average College Graduate Has $26,600 in Student Loan Debt; Total National Student Loan Debt Exceeds $1.1 Trillion. According to the Washington Post: “A recent report from the Consumer Financial Protection Bureau estimates that there 38 million student loan borrowers in the United States and the total debt load has passed $1.1 trillion. The Project on Student Debt has estimated that 66 percent of graduating college seniors in 2011 had some student loan debt, with an average balance of $26,600.” [Washington Post, 5/20/13]

CBO: Federal Government Turns $51 Billion Profit on Student Loans. According to the Huffington Post: “The Obama administration is forecast to turn a record $51 billion profit this year from student loan borrowers, a sum greater than the earnings of the nation's most profitable companies and roughly equal to the combined net income of the four largest U.S. banks by assets. Figures made public Tuesday by the Congressional Budget Office show that the nonpartisan agency increased its 2013 fiscal year profit forecast for the Department of Education by 43 percent to $50.6 billion from its February estimate of $35.5 billion.” [Huffington Post, 5/14/13]

AP: House Republican Plan Would Raise Student Loan Interest Rates Up to 8.5 Percent. According to the Associated Press: “Under the GOP proposal, student loans would be reset every year and based on 10-year Treasury notes, plus an added percentage. For instance, students who receive subsidized or unsubsidized Stafford student loans would pay the Treasury rate, plus 2.5 percentage points. Using Congressional Budget Office projections, that would translate to a 5 percent interest rate on Stafford loans in 2014, but the rate would climb to 7.7 percent for loans in 2023. Stafford loan rates would be capped at 8.5 percent, while loans for parents and graduate students would have a 10.5 percent ceiling under the GOP proposal.” [Associated Press, 5/16/13]

  • Headline: Republicans move forward with student loan plan that could mean higher rates later [Associated Press, 5/16/13]

Under the “Students Pay More Act,” Graduates Would Pay Almost $5,000 More in Student Loan Interest. The Associated Press reported: “In real dollars, the GOP plan would cost students and families heavily, according to the nonpartisan Congressional Research Service. The office used the CBO projections for Treasury notes’ interest rates each year. Students who max out their subsidized Stafford loans over four years would pay $8,331 in interest payments under the Republican bill, and $3,450 if rates were kept at 3.4 percent. If rates were allowed to double in July, that amount would be $7,284 over the typical 10-year window to repay the maximum $19,000.” If the Republican plan were implemented, college graduates would pay $4,881 more in interest, compared to the current rate. [Associated Press, 5/16/13]


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