The City Council passed two resolutions to help local college students combat the rising costs of student loans. They are also calling on Congress to pass and President Barack Obama to sign the Federal Student Loan Refinancing Act, which would reduce the interest rate of federal subsidized Stafford student loans for one year from the current 3.4 percent to 0.75 percent.
The resolutions, introduced by Council Members Ydanis Rodriguez and Melissa Mark-Viverito, are aimed at bringing greater awareness to the pending doubling of interest rates of all federal student loans from 3.4 percent to 6.8 percent, a move that would have devastating impacts across the country.
The federal legislation supported by these resolutions can allow students to refinance their student loans as well as lower interest rates to those offered to U.S. banks by the Department of the Treasury. New York Sen. Kirsten Gillibrand and Massachusetts Sen. Elizabeth Warren penned the two resolutions.
Currently, over 38 million people have student loan debt obligations, amounting to close to $1 trillion. Over the last 10 years, student loan debt has quadrupled from $240 billion in 2003. With the planned increase in federal Stafford loans, more defaults are expected, because, currently, students are not able to refinance their loans.
“Our country is in the midst of a crisis, with millions of students already unable to pay their exorbitant loans back on time,” said Rodriguez, who chairs the City Council’s Committee on Higher Education. “The planned increase will exacerbate this issue unless our leaders in Washington step up. We can no longer continue to mortgage the American Dream at such usurious rates. There is a clear need to reform this system so that students do not become so heavily weighed down by their debt immediately after college.”
Mark-Viverito said that the City Council plans to send a clear message to Congress to lower student debt. She added that lowering student debt is also an investment in young people and the future of the country.
“The planned doubling of interest rates will only discourage prospective college students from seeking to better themselves through higher education,” she said. “That is why I am supporting Sen. Warren’s proposal to lower interest rates to the same level that banks pay for at least one year, as well as Sen. Gillibrand’s legislation for a long-term fix.”
Reports indicate that student loan debt exceeds $1 trillion in the United States and that the average college graduate has $26,000 in student debt. Over 80 percent of Blacks who attend college borrow money.
A recent study by the College Board Advocacy and Policy Center revealed that 27 percent of Blacks who graduated college have a student loan debt of $35,000 or more. Furthermore, nearly 70 percent of Black students did not finish college because of the high cost of tuition, compared to 43 percent of whites.