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Statement of Christine Lindstrom, U.S. PIRG Higher Education Program Director, on the Senate's passage of today's student loan bill:
Washington, D.C. - "On July 1, the interest rate for subsidized Stafford student loans doubled from 3.4 percent to 6.8 percent, driving up costs for more than seven million borrowers by $1,000 per loan. Two-thirds of these students come from families with incomes of $50,000 or less.
"Despite the threat that higher student debt poses to student borrowers, the Senate has twice beaten back attempts to extend the low 3.4 percent rate.
"Instead, the Senate negotiated a compromise, which passed today, 81-18. In the near term it reverses the rate hike. Rates would be set at 3.85 percent for this year and 4.62 percent for next year for undergraduate Stafford student loans.
"But under the new framework, five years from now, an undergraduate who takes out the maximum in subsidized and unsubsidized Stafford loans will pay $4,700 more over the life of the loan than she would have last year – and $900 more than if the rate simply stayed at 6.8%.
"Just two years from now, parent and graduate student loan borrowers will pay more than the current rates of 6.8 percent and 7.9 percent, and will continue to do so through 2023.
"Not only do future students pay more so that current students pay less, but the deal charges future borrowers even more than necessary – creating $715 million in additional revenue that will be put toward deficit reduction.
"The bottom line is that students will pay more under this bill than if Congress did nothing, and low rates will soon give way to rates that are even higher than the 6.8 percent rate that Congress is trying to avoid."