More than 382,000 students across Ohio – including more than 10,000 in Columbiana, Mahoning and Trumbull counties – would be forced to pay significantly more for their student loans unless Congress passes legislation by July 1 to block the interest rate from doubling on federally-subsidized Stafford loans.
On June 11, U.S. Sen. Sherrod Brown (D-OH) joined students at Youngstown State University to call for passage of Brown’s bill that would maintain the current interest rate, which is set at 3.4 percent, and prevent a hike to 6.8 percent scheduled for July 1. Brown also released a report on the number of students at each college and university in Ohio that utilize subsidized Stafford loans.
“Unless Congress acts, in less than three weeks, approximately 10,000 students in the Mahoning Valley will be forced to pay more for their Stafford loans,” Brown said. “Already, recent college graduates are struggling to find work, with half of young college graduates jobless or underemployed. Allowing the interest rates on federal student loans to double is a step backwards. Ohio students—and our economy—can’t afford this sucker-punch at a time when we need to be doing more to get our economy back on track. Time is running out, and that’s why passing this bill, which would maintain the current interest rate on Stafford loans, is so important.”
Cary Dabney and Laura Krcelic, both attending YSU with the help of subsidized Stafford loans, discussed how Stafford loans have allowed them to afford college costs. Brown was also joined by Elaine Ruse, director of the Office of Financial Aid and Scholarships at YSU, who outlined how affordable student loans are critical for the roughly 10,000 Mahoning Valley students that rely on federally-subsidized Stafford loans to earn their college degree. YSU’s student body president, Cory Okular, also attended.
Brown outlined how his legislation, the Stop the Student Loan Interest Rate Hike Act of 2012, would help keep college tuition more affordable for hundreds of thousands of Ohio college students. According to the Senate Health, Education, Labor, and Pensions (HELP) Committee, a higher interest rate would add approximately $1,000 in loan debt per loan for the average student. The Stop the Student Loan Interest Rate Hike Act, which is fully paid for, would keep the student loan interest rate from climbing by eliminating a tax loophole that the watchdog agency, the Government Accountability Office (GAO), has determined is a problem as it currently allows some shareholder-employees of so-called “S corporations” to avoid paying their fair share of Social Security and Medicare payroll taxes.
The College Cost Reduction and Access Act of 2007 cut the fixed interest rates on newly-subsidized Stafford loans for undergraduate students to 3.4 percent over a set period of time, but the interest rates on any new subsidized Stafford loans will double to 6.8 percent on July 1, 2012 unless Congress takes action. The rate increase would not apply to loans that are currently in repayment or that have already been disbursed, but students still attending school after July 1st that need to take out new federally-subsidized Stafford loans would pay higher rates on the new loans, adding even more to their existing debt load.
Last year, Brown introduced the Student Loan Simplification and Opportunity Act of 2011, legislation that would simplify the student loan repayment process. This legislation would help borrowers avoid financial penalties for missed payments, save Ohio graduates money on their student loans, and bolster the federal Pell Grant program that helped send more than 240,000 Ohio students to college from 2008-2009.
About Youngstown State University
Youngstown State University is a comprehensive emerging urban research university that offers over 14,000 students more than 135 undergraduate and graduate programs backed by a strong tradition of teaching, scholarship and public service. As a major educational and economic development resource in the region, YSU is known for its focus on academic research and creative programs that transform its students into successful professionals, scholars and leaders. Located in the heart of the Tech Belt between Cleveland and Pittsburgh, YSU provides opportunities for students to actively participate with accomplished faculty, often in one-on-one settings, on advanced research and creative collaborations. The beautiful 145-acre campus includes high-tech classrooms, state-of-the-art labs and performance facilities, a variety of on-campus housing options and recreational facilities among the best in the nation.