370,000 PA students affected by student loan rate double
Interest rates on subsidized Stafford student loans doubled on July 1st, from 3.4 percent to 6.8 percent, after the U.S. Congress failed to act on legislation which would’ve kept it at the original rate.
The increase will cost the average student about $2,600 per year, according to the Congress’ Joint Economic Committee.
There’s pressure to undo the rate hike. A procedural vote has been scheduled in the U.S. Senate tomorrow to lower the rate back to 3.4 percent, and pay for it by closing a tax loophole. In the House, they’re attempting to use a little-used parliamentary procedure to force a vote. Congress being Congress, there’s little reason to be hopeful.
And for the time being, students are left holding the bag.
But how bad is it? To figure that one out, Philadelphia Weekly contacted the Institute for College Access and Success to ask just how many students going to school in this city and state would be affected by the increase. And the numbers are not good.
Pauline Abernathy, vice president at the Oakland-based Institute, using numbers from the Department of Education, estimates that 370,000 students who go to college in Pennsylvania will be affected by the increase during the 2013-2014 school year, beginning this fall.
The way the increase happened, only those taking out federal subsidized Stafford loans in the future will see their rate double, not those who’ve taken them out in the past.
Additionally, Abernathy notes, at least 100,000 of those 370,000 are likely based in Philadelphia, which is estimated noting about 30 percent of Pennsylvania’s college students go to school in the city. Exact numbers on Philadelphia students were not immediately available.
Pennsylvania students will likely take out $1.4 billion in Stafford unsubsidized loans during the 2013-2014 year.
“We do an annual report on student debt and Pennsylvania has some of the highest student debt levels in the nation,” she adds. “More students borrow, and they borrow more than in other states across the country.”
Particularly at Pennsylvania public colleges, she says, tuition and fees are higher than the national average and less grant assistance is provided to students in other states. “So the combination leads to students borrowing more to afford college,” she says.
She says it’s important the vote happens and is nervously optimistic about it. “Unfortunately, in the Senate these days, one needs more than a majority to enact legislation. It’s almost always 60 votes [which is needed to break a filibuster.]”