Report: Affordable Higher Education

Student Loan Debt in Maine

Why the Low Interest Rate for Student Loans Should Be Extended
Released by: U.S. PIRG

Student Loan Interest Rates Set to Double

Without a new plan from Congress, on July 1 the interest rate on subsidized Stafford student loans will double, from 3.4 percent to 6.8 percent.  A 2007 college affordability plan lowered the rate, but expired in 2012.  Last year, President Obama and Congress extended the low rate for one year.

In Maine, 33,883 federal student loan borrowers will be impacted if the rate doubles[1]. 

Student Borrowing in Maine

Seventy-one percent of Maine’s graduates carry student loan debt, with an average of $26,046 in debt per borrower.[2]  Unfortunately, student loan borrowers in Maine will be hit with higher loan costs on July 1, which translates into an additional $910 in cost per student, per loan.[3]

Meanwhile, as students are struggling with high costs, the federal government is collecting massive, shortsighted revenue from student loan borrowers – projected at $50 billion for next year alone.[4]

Student Debt and Its Impact on the Economy  

Last April, at $1 trillion, student loan debt surpassed credit card debt as the top form of consumer debt across the country.[5]  Such significant debt has serious implications for the economy in Maine and elsewhere.  For instance, if the low 3.4 percent rate gets extended, this year’s student loan borrowers in Maine would save a combined $30,833,530, which could be spent in the consumer economy rather than being applied toward paying down debt.

Strengthening the Maine Job Market

The Maine job market is experiencing a skills gap between the number of people without jobs and the skills employers are looking for in their employees.  By 2020, 62 percent of the jobs in the state will require a certificate or a degree, while only 36 percent of the current population has one.[6]  Keeping the interest rate at 3.4 percent on student loans will send an urgent signal to students, workers, and the unemployed to get the postsecondary training needed to adapt to new economic realities.

Maine’s Senators

Senator Susan Collins has supported students and the economy in Maine.  Senator Collins backed the College Cost Reduction and Access Act of 2007, which set the lower interest rate.[7]  Last year, Senator Collins voted against the first proposal to extend the interest rate[8] and voted for the final rate extension plan.[9]

Senator Angus King was not yet in the Senate during last year’s interest rate extension debates.


 

[1] Analysis, U.S. Department of Education, 202-401-1576.

[2] “Student Debt and the Class of 2011,” The Institute for College Access & Success, http://projectonstudentdebt.org/files/pub/classof2011.pdf.

[3] Analysis, U.S. Department of Education, 202-401-1576.

[4] Philip Elliott, “House Advances Student Loan Fix,” Associated Press, May 16, 2013, http://bigstory.ap.org/article/house-take-student-loan-fix.

[5] Tom Raum, “Recovery Threatened by Student Loan Debt,” Associated Press, April 3, 2012, http://www.boston.com/news/education/higher/articles/2012/04/03/recovery....

[6] “Maine Analysis 2011,” College Complete America, http://www.completecollege.org/docs/Maine.pdf.

[7] “Bill Summary and Status – 110th Congress (2007-2008) H.R. 2669,” Library of Congress, http://thomas.loc.gov/cgi-bin/bdquery/z?d110:H.R.2669:.

[8] “U.S. Senate Roll Call Votes, 112th Congress, S 2343,” United States Senate, http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm....

[9] “U.S. Senate Roll Call Votes, 112th Congress, S 1813,” United States Senate, http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm....

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