By Dave Johnson
President Obama will join college students at a White House event launching a new push to keep student loan rates from doubling in July. Among the various plans offered, Sen. Elizabeth Warren’s (D-Mass.) plan is the most affordable for students, while the Republican plan tries to “make money” off of students using fluctuating “market rates.”
Loan rates for more than 7.4 million students with federal “Stafford loans” are scheduled to double July 1 from 3.4% to 6.8% if nothing is done. The amount of student loan debt is massive. U.S. students currently owe nearly $1.1 trillion in student loan debt, and this amount is increasing at a rate of about $2,853.88 per second. This amount is greater than total credit card debt currently owed. Among people younger than 30, 35% are near default on their student loans, as well as about 32% of those ages 30 to 49.
Sign up to receive AFL-CIO Now blog alerts>>
In 2005, average student loan debt was just over $17,000. By 2012, it was above $27,250. This was a 58% increase in just seven years. This debt creates a drag on the U.S. economy—homeownership and car ownership have declined for young households.
There are various plans before Congress to avoid the July 1 rate-doubling. But Republicans are holding the action hostage with their bill that makes a college education much more expensive. It is going right down to the July 1 wire, and students don’t know what their rates will be.