NJ College Students Face Bigger Bills [AUDIO]
Thousands of applicants for Stafford loans could be facing a higher interest rate if Washington does not extend the lower rate for students of the 2013-2014 school year.If a decision is not reached by July 1 interest rates on the federal loans will double from 3.4 percent to 6.8 percent, what they were before 2007 when the College Affordability Plan was enacted, and force an estimated 144,926 college and graduate students to pay doubly high rates.
The New Jersey Public Interest Research Group says the increase in Stafford loan rates will result in the average student paying an additional $928 per loan. NJPIRG reports the average New Jersey college graduate has $27,610 in student debt.
NJPIRG Advocate Jennifer Coleman said the $134 million dollars raised by the increase will only hinder the state’s own economy.
“The state’s economic recovery can be hastened by easing the burden of high student loan debt. Despite the number of unemployed looking for jobs, the lack of an educated workforce is a major barrier for hiring. By 2020 60 percent of all jobs will require a bachelor’s degree for hiring.”
She said it also puts $134 back into the consumer economy.
“Borrowers could use that money to make a down payment on a house or condo, pay for a wedding, or help pay down other consumer debts.”
Higher rates affect students like Loren Whitaker, who attends Rutgers Newark. The Maplewood native’s parents both were laid off, forcing him to work part time and rely on federal loans to pay for college. He’s already had to switch schools after tuition became too expensive, and another perspective increase in interest rates becomes another point of stress.
“I feel distracted, and I’m worrying pretty much every day about how I’m going to pay for my student loans. Once I graduate, how am I going to survive in the real world once I actually have to pay off these loans.”
Coleman pointed out only Stafford loans are subject to the rate increase, but the federally subsidized loans also help fund education for the state’s neediest students.
“Sixty-eight percent of subsidized Stafford loan borrowers are from families that makes under fifty thousand dollars a year.”
There’s a disagreement between the president, Congress, and the Senate over whether to tie student interest rates to the current market, whether it should be fixed or variable, and whether it should be capped.