FOR IMMEDIATE RELEASE: April 16, 2012
SCHUMER: STUDENT LOAN INTEREST RATES FOR THOUSANDS OF STUDENTS IN THE SYRACUSE AREA SET TO DOUBLE FROM 3.4% TO 6.8% THIS SUMMER UNLESS CONGRESS INTERVENES – SENATOR PUSHES LEGISLATION TO BLOCK RATE HIKE AND KEEP COLLEGE TUITION AFFORDABLE
Today, U.S. Senator Charles E. Schumer announced his support for legislation to stave off an interest rate increase for student loans that could raise the cost of attending college for thousands of Syracuse-area students. On July 1st, the interest rates on federally-subsidized Stafford loans will double from 3.4% to 6.8% unless Congress takes action to block the rate increase that could add thousands of dollars in interest payments to the cost of attending college. In 2007, Congress lowered the rate on federally-subsidized Stafford loans – currently held by 8 million undergraduates nationally and over half a million students in New York. But without an extension of the reduced rate, interest rates will double for students receiving these loans, driving up the cost of going to college for New York students as much as an additional $3,800 over a ten-year repayment period. At Syracuse University, Schumer announced his support for legislation that would extend the 3.4% rate for one year, and urge Congress to take up legislation to make the extension permanent.
“Rising interest loan rates sound like nails on the chalkboard for New York’s college students,” said Schumer. “College tuition has skyrocketed at universities and colleges across the country, placing a huge burden on middle class families. As the economy is just starting to turn the corner, we need to do everything in our power for a high-quality education at institutions like Syracuse University to be as affordable for families and students as possible. Federal student loans are a critical resource for students to help cope with these costs and that’s why keeping federal student loan interest rates low is a no-brainer. With July 1st fast approaching, I urge Congress to extend these low-interest rates to keep the dream of going to college alive for thousands of students in Central New York.”
“We at SU know that affordability is an absolutely crucial aspect of assuring that higher education is genuinely accessible to students from all backgrounds,” said SU Chancellor and President Nancy Cantor. “And keeping student loan interest rates down is a pivotal part of the formula for assuring affordability. We’re grateful to Senator Schumer for his leadership on this issue that affects students across the income spectrum.”
Schumer was joined by Don Saleh, Vice President of Enrollment Management, Ryan Williams, Associate Vice President of Financial Aid, and local students from Syracuse University who would see their bills increase if the loan rate hike is not stopped. The current fixed interest rate on federal-subsidized Stafford loans is 3.4 percent. Stafford loans are offered on the full faith and credit of the United States government and, thus, are offered at a lower interest rate than they would be privately. To receive Stafford loans, students must meet rigorous need requirements. Loans are not expected to be paid back while the student is enrolled in college or for a six-month grace period afterward. The federal government pays the interest for the period that the student is in college, unlike unsubsidized Stafford loans.
Schumer today announced his support for S. 2051, which is a bill to extend the reduced interest rate for Federal Direct Stafford Loans. The bill, introduced by Senator Jack Reed of Rhode Island, would extend the 3.4% interest rate for one year – meaning thousands in savings for New York students and students across the country that rely on this loan program. Schumer noted that keeping interest rates low was essential given the skyrocketing cost of college.
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% over a set period of time; 6.0% in 2008-09, 5.6% in 2009-10, 4.5% in 2010-11 and 3.4% in 2011-12. However, 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 rather new loans that will be disbursed after July 1st. In other words, students still attending school after July 1st 2012 that need to take out new federally-subsidized Stafford loans would pay higher rates on the new loans only, adding to their already stacking debt.
According to the New York State Higher Education Services Corporation, the average student who receives four years of subsidized Stafford loans would end up paying up to $3,798 more over the course of a ten-year repayment term, if the interest rate is allowed to double this July 1st from 3.4% to 6.8%. This number is obtained by comparing the total amount of interest that a student would pay under either interest rate scenario, assuming that student had taken out the maximum amount of Stafford subsidized loans for four years of college and repays the loans over a 10-year period. Freshman are eligible for loans up to $3,500, sophomores are eligible for up to $4,500, and juniors and seniors may receive loans up to $5,500 for each of the last two years of school
In the Syracuse-area there are thousands of undergraduate students that receive federally-subsidized Stafford loans. A breakdown of the number of student recipients of federally-subsidized Stafford loans by school in the Syracuse region appears below.
- Cayuga Community College – 2,294 - Syracuse University – 9,483
- Cayuga Onondaga BOCES – 31 - Onondaga Cortland Madison BOCES – 496
- Le Moyne College – 2,172 - Crouse Hospital School of Nursing – 203
- Onondaga Community College – 3,359 - St. Joseph’s College of Nursing – 181
- SUNY Upstate Medical Univ. – 895 - Simmons Instit. Of Funeral Service - 24
- SUNY College of Enviro. Science/Forestry - 965