Bill prevents loan rate increase
Interest rates 3.4 percent for Stafford loans
Published: Monday, July 9, 2012
Updated: Wednesday, July 25, 2012 22:07
U.S. President Barack Obama signed legislation on Friday that will give college students a little more time to breath. The Surface Transportation Bill states that it will maintain jobs on transportation projects while it prevents interest rate increases on new loans to millions of college students.
“[Let’s] make sure that we are keeping folks on the job and we’re keeping our students in school,” Obama said.
The bill was derived from efforts by Obama, who for the last few months has wrestled with Congress in order to appropriate funds that would prevent an increase in interest rates on subsidized Stafford loans for students.
“This increase would have been tough because I take out student loans and will be paying them off after college. Fortunately, the rate got frozen for another year, so I hope congress is able to work out a long term solution within the next year before that issue comes up again,” said John Claybrook, student body president and finance major.
The interest rate on subsidized Stafford loans taken out as of July 1, was said to remain at 3.4 percent for one more year. This was an 11th-hour congressional decision reached after the interest rate, which was set by lawmakers to double to 6.8 percent this year, became a rising political issue.
“This decision is going to be a benefit to the country and the government in the long term
because these people are going to be educated, they are going to be leaders in their fields and they are going to work hard and be good citizens,” Claybrook said in regards to Congress’s halt to the increasing of interest on student loan rates.
With the signing of the Surface Transportation Bill on Friday, undergraduate students are able to avoid an interest rate that would have doubled beginning July 1 for an estimated 7 million students expected to get new loans this year. This would have added an extra $1,000 to the average cost of each loan.
While addressing the nation on Friday, Obama said it was not enough just to keep interest rates from doubling.
“I’ve asked Congress to reform and expand the financial aid that’s offered to students. And I’ve been asking them to help us give two million Americans the opportunity to learn the skills that businesses in their areas are looking for right now through partnerships between community colleges and employers,” said Obama.
The Surface Transportation Bill will be in effect for the next two years.
“I would think that with the state our economy is currently in, now more than ever, is the time to focus on education,” said Erin Mitchell, senior finance major. “With the job market looking the way it does, a college degree is essential. In addition to financial aid, student loans have been a way of affording kids my age a way to pay for school and I am glad the government found a solution and decided against an increase in interest rates.”