WASHINGTON, Feb. 1 - Vermont's two U.S. Senators, Patrick Leahy (D-Vt.) and Bernie Sanders (I-Vt.), Wednesday joined in introducing legislation to stop student loan interest rates from doubling this summer.
In 2007 Congress passed the College Cost Reduction and Access Act, which reduced the fixed-interest rate on Stafford Loans from 6.8 percent to 3.4 percent, helping millions of American students better afford college education. That law is about to expire. Without new action, subsidized Stafford loan interest rates are set to double, returning to 6.8 percent on July 1.
The U.S. Department of Education estimates that more than 10 million students each year borrow for college using subsidized Stafford loans -- a program, named for the late U.S. Senator Bob Stafford (R) of Vermont, that effectively targets help to low- and middle-income families. Almost 40 percent of borrowers come from families with earnings below $40,000 per year, and another 20 percent have income between $40,000 and $60,000. While recent strengthening of the separate Pell Grant program has been instrumental in ensuring that lowest-income students have help to attend college, the Stafford loan program addresses the needs of millions of families that still have significant financial need but who may not be eligible for Pell Grants. If Congress fails to prevent the July loan rate hike, American families could be forced to pay thousands more in interest payments to receive loans to attend college.
Leahy said, "It is already difficult for working families to afford college, and this would make a tough situation even worse. No student and no family should have all opportunity stripped away for being able to afford a college education. This bill offers a timely jolt of relief by ensuring that students can at least have the best available interest rates."
Sanders said, "At a time of rising college costs and unsustainable student debt, it is essential that we do all we can to make college affordable for students and working families."
Sanders and Leahy joined Senator Jack Reed (D-R.I.) and others in introducing the new bill, which has been referred to the Committee on Health, Education, Labor and Pensions, of which Sanders is a member.