Student Government petition urges Congress to protect student loan rate
The Student Government executive board is circulating a petition urging Congress and President Barack Obama to keep the interest rate for subsidized Stafford loans as 3.4 percent. Subsidized Stafford Student loan interest rates will double July 1 unless Congress renews the subsidy that has kept rates at 3.4 percent by the end of the month.
The new 6.8 percent rate could cost the average freshman between $1,000 to $2,400 in additional debt over four years.
Subsidized Stafford loans are federal loans given to students that demonstrate financial aid.
The Congressional Budget Office estimates that the subsidized Staffords will constitute about 26.2 percent, or $28 billion of all federal loans in 2013.
In the petition released June 19, the executive board urges Obama and members of Congress to not double the interest rate because the rate will make AU less accessible and affordable.
"This is going to have a detrimental impact on students across the nation, including those at AU," SG President Patrick Kelly, who is working with student government presidents nationwide to oppose the increase, said in an email to The Eagle.
For AU students, the change would only affect newly issued loans, including renewed loans, after July 1. The new policy would not change rates on loans issued before July 1.
Current students will receive letters by July 1.
An estimated 58 percent of undergraduates at AU receive loans.
With an average of $36,200 in debt, AU graduates are the most indebted of D.C.'s schools.
Congress's decision has been delayed by disagreements between the Democrats and Republicans. There are currently six plans from Republicans, Democrats and Obama that address the interest rate increase, but Congress has not passed any of the plans.
The latest plan would tie the interest rate to the 10-year Treasury note, or what it costs the government to borrow for 10 years. The yield on the Treasury note closed at 2.41 percent on June 20.
It is not the first time Congress has made a decision close to the deadline. Last year's renewal of the interest rate came two days before the deadline, according to Shirleyne McDonald, associate director of Financial Aid in the AU Office of Enrollment.