SOUTHFIELD — Speaking at Oakland Community College to a diverse array of students from universities across Michigan, Senator Debbie Stabenow (D-Mich.) detailed the latest push by Senate Democrats for new legislation that would retroactively confront the recent rise in interest rates for subsidized federal loans.
On July 1, interest rates on federal student loans rose from 3.4 percent to 6.8 percent after Congress failed to agree on terms to keep interest rates down. There have been two attempts in the Senate to pass bipartisan legislation in recent weeks but both have failed to receive the 60 votes necessary to work around a Republican filibuster.
Federal loans were given to 10,761 University students in the 2011-2012 academic year, according to the Office of Financial Aid. For in-state students, these loans totaled $6.63 million with an average of $8,308 per student, while out-of-state student federal borrowing totaled $37.42 million with an average of $13,501 per student.
University Spokesperson Rick Fitzgerald said the University has been working to reduce loans in recent years through grants in financial aid packages, but will continue to monitor the situation in Washington.
Stabenow said in her address that the increase in interest rates will give the government $51 billion in profit, yet would take money away from hardworking students and would contribute to the already large pool of student debt, now totaling $1 trillion. University experts have expressed concern on the impact of student loan debt on spending and the economy.
“We should not be, as a federal government, making a profit off the backs of students,” Stabenow said.
Stabenow, along with other senators, has been working on a bill called Keep Student Loans Affordable Act of 2013, which would keep student loan rates at 3.4 percent for a year while Congress works on putting forward more comprehensive higher education reform that would include reforms on student debt. The Senate is scheduled to vote on the bill Wednesday.
She added that interest rates on student loans should not be a partisan issue and that Republican proposals would make the issue of student loan rates worse in the long run.
“It may keep the rate low for the moment and then it would go up and go up higher than doubling the rates which makes absolutely no sense whatsoever,” Stabenow said.
But to get the five votes necessary to block a Republican filibuster, Stabenow said she and her colleagues are relying on the public to step up pressure on their senators. There have been one million signatures on a petition so far.
“We are hoping that because the public wants to keep the rate low, that they will call their senators between now and Wednesday so we can get the votes we need,” Stabenow said.
When asked about the chance of passing a comprehensive overhaul, Stabenow said the recent passage of immigration legislation is a key sign that bipartisan agreements could be reached within the Senate.
“We never know long term but you don’t know unless you try,” she said.
But as Politico reported, even if the Keep Student Loans Affordable Act passes through the Senate, it has little chance of being brought to the floor in the House of Representatives. House Republicans seem more inclined to pass a bill that is being put together by a bipartisan group of senators that, among other measures, proposes permanently tying subsidized and unsubsidized loans to the rate of 10-year treasury notes plus 1.85 percent.
Education prof. Edward St. John said interest rates were just the “tip of the iceberg” when it came to reforming how students paid for higher education.
“The current course (will be) a disaster for the generation of people who have graduated in the last five to ten years and for future generations unless we make radical change,” St. John said.
St. John said there is a need for better coordination of state appropriations to accommodate student financial need, more dependence on grants than loans and a societal desire to create an equitable public finance system.
“We have to contend with the loan burden at the same time we contend with the resistance from the political right and the wealthy class to increase taxes,” St. John said. “I think the two things have become intertwined.”
Darren Cavallari, a student at Kalamazoo College, said his education has been paid for through a patchwork of financial aid, though he does owe $27,000 in debt.
“The combination of financial aid has made the dream of going to college a reality for me and for my family, especially because of the low interest rates on my student loans,” Cavallari said.
Cavallari said he wanted to have a stable financial future and one way to secure that was to have low interest rates.
“I am asking everybody to please contact their representatives,” he said. “(We need) to keep this conversation going so that students like me and all of us here can continue to have this low interest rate to finance our college education and our future.”
As Stabenow closed her press conference, she said Congress needed to understand the necessity of affordable higher education in order to remain globally competitive.
“If we believe that investing in the opportunity to support young people who work hard and have a dream and are working for success … then it is in the interest of the country to keep access to education as affordable as possible.”