Some Advocates Want Long-Term Student Debt Solutions
washington update
As Congress continues to debate whether to extend low student interest rates for one year, a growing number of advocates are calling for longer-term solutions to the mounting debt problem facing low- and middle-income students aspiring to attend college.
The discussion of whether to continue the 3.4 percent interest rate for new subsidized Stafford Loans -- a rate that would double to 6.8 percent in July -- has some frustrated advocates and student leaders seeking longer-term solutions to the problem. The legislation mired in Congress only would extend the low interest rate for one year.
"This is not a political football that you can throw around and then forget," said Victor Sanchez, president of the United States Student Association (USSA). While he supports a short-term fix, he said frustrated students want a longer-term answer to interest rate and other loan issues.
"It's become political theater, which is unfortunate, because we're talking about people's lives," he said. "You have a lot of jaded people. It's not the environment we need."
Sanchez says student activists are particularly interested in new legislation from Rep. Hansen Clarke, D-Mich., that would continue the low interest rate indefinitely and outline more generous provisions to get student loans forgiven.
Under H.R. 4170, The Student Loan Forgiveness Act, the federal government would forgive all loans for students who have made payments equal to 10 percent of their discretionary income for 10 years.
Students also could count time spent in loan deferment due to economic hardship as time in good standing toward the 10-year period. Clarke says the bill would provide a "second chance" for graduates with crushing amounts of debt.
So far, the bill has attracted 17 cosponsors, and Sanchez said the plan is one of the association's top priorities because it proposes more comprehensive student loan improvements. "We want the hyper partisanship to stop," he said, noting that Congress should take a more thoughtful look at long-term solutions.
Another idea targets private student loans, or borrowing done outside the federal loan system. Federal agencies and consumer groups have received complaints about some of these loans that, critics say, carry high interest rates and offer little flexibility for students with economic hardships.
Rep. Ed Towns, D-N.Y., also argues that many students and families take out these private loans when they still have not met borrowing limits under the government's subsidized loan programs.
In response, Towns has proposed the College Debt Swap Act, which would allow private student loan borrowers an option to swap their private loans for federal student loans if they have not reached their federal borrowing limits. In introducing the measure, Towns noted that private loans are "less flexible, have higher interest rates, and generally higher default rates than federal loans."
Private loans also are a priority for USSA. Sanchez says students plan to speak out at upcoming shareholder meetings of private student loan companies. "We want them to re-negotiate more loan debt," he said.
Still, the main issue facing higher education advocates is the subsidized student loan rate scheduled to double in a month's time. Despite concerns about other loan issues, any solutions beyond the immediate interest rate deadline are far away, said Rich Williams, higher education advocate at U.S. PIRG.
"That's a conversation that's not going to happen by July 1," Williams said.
But as some lament the ability of Congress to deal with a long-term solution, the immediate concern is that lawmakers cannot even agree on a one-year extension of the 3.4 percent interest rate, arguing over how to address the extension's $6 billion annual cost.
In early May, a Republican-led filibuster thwarted the Senate's consideration of a bill to extend the 3.4 percent interest rate for another year. The GOP objected to Democrats' plan to close tax loopholes for some wealthy small business owners to come up with the $6 billion needed to pay for the loan fix. Sen. Tom Harkin, D-Iowa, sponsor of the Senate bill, said the GOP "put politics ahead of students."
Meanwhile, Republicans in the House have approved a bill to maintain the 3.4 percent interest rate. But Democrats oppose the measure because it would pay for the extension by taking funds from President Obama's health care law. The White House immediately issued a veto threat should that bill reach the president's desk.
Still, despite intense jockeying among lawmakers and advocates, Williams said a short-term solution to the interest rate issue is still possible.
"Solving the student debt levels needs to be a priority," Williams said, noting that Congress routinely waits until just before a deadline to approve legislation.
Clarise McCants, a Howard University political science major, center, flanked by Sen. Sherrod Brown, D-Ohio, left, and Sen. Jack Reed, D-R.I., right, speaks during a news conference on Capitol Hill in Washington prior to Senate deliberation on a Democratic proposal to keep federally subsidized loan interest rates from doubling for millions of college students.
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By CHARLES DERVARICS
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Thank you for sharing information about the Federal Student Loan Help Center. As a recent graduate burdened with student loan debt, I appreciate resources like this that provide guidance and support. It’s reassuring to know that there are dedicated centers out there offering assistance and solutions for navigating the complexities of student loans. This is a valuable resource for anyone in need of financial aid and repayment options. Keep up the great work in spreading awareness and aiding students on their journey toward financial stability and success.
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