ANNAPOLIS, MD.-Maryland students will have to pay $2477 to $2981 more in college loans beginning today, according to a new report released today by the research arm of the Campaign for Americas Future. College students and graduates will be pushed deeper into debt as interest rates on Stafford loansthe basic student loan
Parents that take out PLUS loans to help their children pay for an undergraduate education also face rising interest rates. This Saturday, rates on PLUS loans will increase from 6.1 percent to nearly 8 percent for existing loans and to 8.5 percent on new loans, costing the average parent nationally an extra $3000 and $3953 respectively.
Maryland students and families are getting hit with one of the largest interest rate hikes on student loans everMaryland students and families are getting hit with one of the largest interest rate hikes on student loans ever, said Toby Chaudhuri, Campaign for Americas Future Communications Director, in a released statement. Families across the country are pinching pennies so they can afford to send their children to college. They are willing to sacrifice a lot for a college education, but it is getting harder and harder as costs go up and student debt goes up too.
Campaign for Americas Future co-director Robert Borosage explained how Congress has carried out a raid on student aid through acts of commission and omission.
The failure of the current administration and Congress to make college affordable for all qualified students is a disservice to the countryThe failure of the current administration and Congress to make college affordable for all qualified students is a disservice to the country, said Borosage. The leadership has allowed interest rates on student loans to rise, increased the interest rate on loans that parents take out to help pay for their childrens education and refused to allow a vote on a bill that would cut interest rates in half on new loans.
The rising interest rates come at a bad time for American families attempting to pay for college. Tuition at the average 4-year public university has increased by 40 percent since 2001, and nearly two-thirds of all 4-year college graduates now have student loans. Students and their parents are going further into debt, creating a burden that is often unsustainable. Student loan debt already causes 14 percent of young graduates to delay marriage; 30 percent to hold off on buying a car; 21 percent to postpone having children; and 38 percent to delay buying a home.
On Thursday, Senator Barbara A. Mikulski (D-Md.), a member of the Health, Education, Labor and Pensions (HELP) Committee, announced that she had joined Senator Edward Kennedy (D-Mass.) in co-sponsoring the Student Debt Relief Act to provide aid to students who borrow loans to pay for their education. The legislation outlines relief for student debt by addressing a number of critical issues including: increasing Pell Grants, cutting PLUS loan interest rates in half, debt relief measures, and tax deductions for college tuition.
60 Minutes also aired a story on May 7, 2006 detailing how the privatization of Sallie Mae has compounded the expense of attending college for many students. According to the report: Sallie Mae was created in 1972 as a quasi-governmental agency, its purpose was to encourage private banks to loan to students who were considered to be a credit risk. It did not make the loans itself. But now, the organization is a publicly-held company (NYSE:SLM) that lends directly to students.
The report notes that since 1995 the stock is up almost 2,000 percent. It further notes that former Sallie Mae CEO Al Lord is said to be worth a quarter of a billion dollars. Some feel that the good fortune of Sallie Mae comes at the expense of taxpayers and students who both end up paying more. Critics argue that society would fare better if the government were to make the loans directly to the students.
Since 2002, the company and its employees have doled out more than $2.7 million to congressmen and their political action committeesThe 60 Minutes report also makes an important note about the politics of student loans: Since 2002, the company [Sallie Mae] and its employees have doled out more than $2.7 million to congressmen and their political action committees, including more than $200,000 to House Majority Leader John Boehner and his PAC. Over the years, Congress has written laws that give the student loan industry special advantages.
Mikulski Co-Sponsors Student Debt Relief Bill
Sallie Mae's Success Too Costly?
Sallie Mae's response to 60 minutes' story