In Focus: College Tuition
George Bush and his friends in Congress cut $12 billion from the student loan program and at the same time cut $70 billion in taxes for millionaires.
What does that mean to students, parents and the rest of us? Skyrocketing interest rates on Student Loans
It’s time for a change.
Tuition is rising. At four-year public colleges and universities, tuition skyrocketed by 40 percent between 2001 and 2006. The typical student leaves college today with $17,500 in debt. Americans United for Change believes that no qualified student should ever be prevented from going to college by a high price tag – however this year alone the Republican Leadership in Congress cut $12 billion from federal student aid programs. It IS time for a change. The Raid on Student Aid can be stopped by cutting interest rates in half to 3.4% for students and 4.25% for parents. This would save the typical undergraduate student borrower, with $17,500 in debt, $5,600 over the life of his or her loans. And with just days before one of the largest interest rate hikes on student loans, Senator Dick Durbin (D-IL) and Representative George Miller (D-CA) are leading the fight to urge students across the country to consolidate their loans and lock in interest rates before the college loan doomsday deadline of July 1st. They also have a plan…
- Cut the interest rate on new student loans in half – from 6.8 percent to 3.4 percent
- Cut the interest rate on new parent loans in half – from 8.5 percent to 4.25 percent
- Save the typical undergraduate student borrower, with $17,500 in debt, a total of $5,600 over the life of his or her loans
However, there are two plans in Congress to address this issue… Click Here to check out the calculator and see how you’d fare with each plan.
Do you know what happens after July 1st?
Due to the $12 billion Raid on Student Aid by the Leadership in Congress, student and parents borrowing money for college will face some real changes on July 1, 2006. Currently, interest rates for students are 5.3%, while rates for parents are 6.1%.
After July 1, 2006:
- Students borrowing any new Stafford loans will face a fixed interest rate of 6.8%.
- Parents borrowing any new PLUS loans through the FFEL program will face a fixed interest rate of 8.5% and Parents borrowing any new PLUS loans from the DL program will face a new fixed interest rate of 7.9%.
Do you know what happens to consolidation loans after July 1st?
Currently, borrowers can consolidate their student loans at a rate of 5.3%, or 4.75% if they are still in a grace period. Parent borrowers can consolidate their loans at a rate of 6.1%.
After July 1, 2006:
- The rate on most new student consolidation loans will be 7.14%, or 6.54% if the borrower is in a grace period.
- The rate on most new parent consolidation loans will be 7.94%.
Look at the rising college tuition rates in YOUR state:
Click Here for a Report on Tuition, Fees, Room & Board at Public Four-Year Institutions.
Did you know?
- The typical student borrower takes on $17,500 in loan debt.i
- Student loan debt caused 14% of young graduates to delay marriage; 30% to hold off on buying a car; 21% to postpone having children; and 38% to delay buying a home in 2002. ii
iRepresentative George Miller. The Raid on Student Aid. U.S. House of Representatives, Washington. October 2005. http://edworkforce.house.gov/democrats/pdf/raidonstudentaid.pdf
iiSandy Baum & Marie O’Malley. College on Credit: How Borrowers Perceive their Education Nellie Mae Corporation. February 6, 2003. http://www.nelliemae.com/library/nasls_2002.pdf