BURLINGTON, Vt., Aug. 9 – U.S. Sen. Bernie Sanders said legislation that President Barack Obama signed today will let college borrowing costs balloon.
“This legislation is going to make an already bad situation of student indebtedness even worse,” said Sanders, a member of the Senate education committee. He said he will fight to make college more affordable when the committee rewrites the Higher Education Act next year.
Under the bill that Obama signed, interest rates are projected to hit 7.25 percent for undergraduate loans in five years, according to the Congressional Budget Office. Also by 2018, graduate loans would go up to 8.8 percent and parents would be charged 9.8 percent on loans for their children to attend college, according to the analysis by the non-partisan agency that provides economic data for Congress.
The legislation sets a 3.9 percent interest rate for undergraduates taking out subsidized and unsubsidized loans this year. Even that figure is greater than a 3.4 percent cap that was in place for the past two years.
“At a time when the average student is graduating from a four-year college $27,000 in debt, when hundreds of thousands of capable young people no longer see college as an option because of high costs and when the U.S. is falling further and further behind our economic competitors in terms of the percentage of young people graduating from college, this legislation will make college even less affordable than it is today,” Sanders said.
Sanders also cited a Congressional Budget Office report that the revenue raised from the steeper loan rates will mean “huge profits” for the federal government totaling some $184 billion over the next decade.
“We have a middle class which is disappearing. The number of Americans living in poverty is near an all-time high. We have millions of families struggling to be able to send their kids to college. So what is the United States government doing? We are helping to balance the budget by saying to middle-class, working families that if you want to borrow money to send your kids to college we are going to make $184 billion in profits off of you. Let me go on record as saying I think that that is a very counterproductive idea. It is a dumb idea,” Sanders said at the time the Senate voted on the legislation.