STUDENT LOAN VICTORY—Students and organizers thank Speaker Nancy Pelosi (Calif.), far right, for leading the way on student debt relief. From left: Issac Kimes and Alexandra Gloriosois (students) and Lead Organizer Erin Eccelston.

On January 17, the U.S. House of Representatives voted 356 to 71 to lower interest rates on student loans for low and middle-income families by cutting billions of dollars in subsidies to private banks.

The legislation will lower interest rates on subsidized Stafford student loans from 6.8 percent to 3.4 percent over the next five years, and was the product of years of research and advocacy by U.S. PIRG.

In his floor statements, Chairman George Miller of the Education and Labor Committee noted U.S. PIRG’s support for the legislation:

“There has been a lot of discussion today about who doesn’t like this bill. Maybe some of the lenders don’t like this bill. Some of the pundits don’t like this bill. Maybe some of the people who work with the lenders don’t like this bill. The people who like this bill and the people who matter are the students.

“And that is why U.S. PIRG and the U.S. Student Association and so many students support this legislation, because they know what this means to them with the passage of this bill, that their interest rates will be lower. They know this will lower the cost of college.”

More than 5 million students receive subsidized Stafford loans every year, and the interest rate reduction would save millions of borrowers thousands of dollars over the life of their loans.

The bill paid for lower interest rates by slightly cutting the excessive subsidies that banks receive to make student loans.

U.S. PIRG’s research played a major role in ensuring the victory. Higher Education Advocate Luke Swarthout and other staff released city-by-city reports, detailing how student loan borrowing has increased, on average, three times faster than consumer spending.

As health care and housing costs continue to rise, we documented that recent graduates are having a harder time balancing their debts with other core expenditures.

In another study, we documented how the growing debt being carried by many students can diminish their career opportunities.

For example, we found that 23 percent of four-year public university graduates can’t afford to live on a teacher’s salary, because of high debt levels.

Next Steps
The House bill was only a first step to lower student debt. U.S. PIRG is working with Senate leadership to pass comprehensive debt reduction measures and to increase need-based aid, which will reduce the demand for student loans.

In the House, we continue to work with Chairman Miller as he crafts comprehensive higher education legislation likely to be introduced later this year.