Federally subsidized student loans provide an affordable loan option for millions of students with financial need each year, especially since Congress reduced the interest rates by half in 2008. Unfortunately, the low rate of 3.4 percent is set to expire if Congress fails to act by July 1st. The new interest rate would double to 6.8 percent, back to its pre-2008 level.
Both Democratic and Republican proposals to freeze the interest rate failed to pass the Senate earlier in May, with the disagreement centering on how to pay for the $5.9 billion subsidy.
With student dependence on loans on the rise, keeping interest rates low is important to ensuring students don’t get saddled with costly debt as they enter an uncertain job market. With the slow recovery, many new graduates are struggling to find good jobs, thereby leaving them more vulnerable to defaulting on their loans.
As Congress considers extending the lower student loan interest rate this month, OpportunityTexas will continue to underscore the need for greater access to financial aid, including affordable student loans and need-based grant aid for low- and moderate-income Texans.
Stay tuned to the OpportunityTexas facebook page for updates on what is happening with the student-loan rate deliberations in Congress this month. And please contact our project with ideas on how you or your organization can work with our team to advocate for adequate and accessible financial aid.