Pocan Opposes Bill that Would Increase College Costs by $4 Billion
Washington– U.S. Rep. Mark Pocan (WI-02) today voted against Republican legislation that would cost students and families almost $4 billion in additional student loan interest fees, and called on Congress to take action immediately to prevent student loan interest rates from doubling. If Congress does not act, on July 1st interest rates on federal subsidized Stafford Loans will double, from 3.4 percent to 6.8 percent, for 7 million low-and middle-income students.
Video of Pocan on the House floor talking about the urgent need to deal with our student loan debt crisis is available here.
“This past weekend, 6,200 students graduated from UW-Madison with a college degree and unprecedented levels of student loan debt. Total college loan debt now tops $1 trillion nationally, and too many Wisconsinites are trapped in endless debt that is preventing them from contributing to the economy and achieving the American Dream,” Pocan said. “We need a long-term solution to our student loan debt crisis, but we must take action right now to support our students by preventing interest rates from doubling. Unfortunately, today we voted on legislation that tries to pay down our debt on the backs of our students, making college more expensive to the tune of almost $4 billion over 10 years. A college education is key to increased economic opportunity, and we should be supporting, not deterring, those who strive to pursue higher education.”
If the Republican plan, H.R. 1911, became law, the interest rate for incoming freshmen next year would be 4.4 percent, up from 3.4 percent. However, the rate for subsequent years would be tied to the 10-year Treasury note (T-Note), and would vary throughout the life of the loan, leaving the cost of students' college education in the hands of Wall Street.
In fact, according to the non-partisan Congressional Budget Office, the projected rate by the time these students start re-paying their loans four years later would be 7.4%--higher than if Congress did nothing and left the rates at 6.8 percent. At the end of the day, the GOP plan would mean more than 7 million low–and middle-income students would have to pay more for their student loans, and would increase student loan debt by almost $4 billion over the next decade.
The weight of student loan debt not only causes hardships for the individual, but also our overall economic recovery. According to research from the Institute for One Wisconsin, Wisconsinites with a bachelor’s or advanced degree make average student loan payments of $388 a month, money they owe before they start to pay for their rent, car payments, groceries, or child care. Due to the burdens of student loan debt, Wisconsinites are renting instead of buying houses, and purchasing used vehicles over new ones—costing Wisconsin more than $200 million annually in lost new car purchases.