Press Release

U.S. Rep. Castor sounds alarm for students and their families: Looming July 1st student loan rate hike a ticking time bomb

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Washington, May 21, 2013 | comments
.S. Rep. Kathy Castor (D-Tampa/St. Petersburg, FL) announced today that the proposed student loan bill to be considered by Congress this week to address the July 1 interest rate hike poses a significant risk to students and families.
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U.S. Rep. Kathy Castor (D-Tampa/St. Petersburg, FL) announced today that the proposed student loan bill to be considered by Congress this week to address the July 1 interest rate hike poses a significant risk to students and families. 

If Congress does not act soon, interest rates for federally backed student loans will automatically double July 1 to 6.8 percent, which would cost the average student about $1,000 more per year.

Rather than offer relief to students and their families, the Republican bill to be voted on Thursday would cost borrowers billions more over the coming years. 

“The Republican bill is projected to more than double by 2017. Additionally, loan rates would be reset every year and prevent students from locking in low rates,” Rep. Castor said.

In the first 10 years alone, students would be expected to pay $3.7 billion more to borrow for college than under the current law, according to the Institute for College Access & Success. 

“College affordability for our students is one of the most pressing issues for Tampa Bay area families,” Rep. Castor said. "Graduating seniors from Robinson High School in Tampa expressed the importance of low student loan interest rates when I spoke to American Government classes last week, and I hear it consistently from students and families all across our community.” 

Rep. Castor is cosponsoring two alternative bills to fight rising student loan interest rates and implement fair, permanent measures for student loan repayment plans. The Student Loan Relief Act would extend the 3.4 percent interest rate on Stafford loans until July 1, 2015. 

In addition, the Student Loan Fairness Act would create a 10-10 standard for student loan repayment – individuals would make 10 years of payments at 10 percent of their discretionary income. After the 10 years, remaining debt would be forgiven. This bill would eliminate the need to vote on temporary measures every year and permanently cap the interest rate for all federal student loans at 3.4 percent. The bill would also suspend interest rates while borrowers are unemployed and reward graduates for entering into public service.

“The average student graduates college with more than $25,000 in debt,” Rep. Castor said. “Such debt puts college out of reach for many and drags down the overall economy as graduates spend too much of their income repaying student loans instead of investing in savings, homeownership, entrepreneurial pursuits or other types of consumer goods.” 

“Students and families need a repayment plan that is affordable and fair – one that works for them and does not cripple our economy.”

Rep. Castor represents a district with more than 34,000 students who have subsidized loans totaling $115 million.

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