BOXER DENOUNCES STUDENT LOAN DEAL THAT WOULD COST STUDENTS MORE THAN CURRENT LAW
New Plan Offers Initially Low “Teaser” Interest Rates—Recent History Indicates that Tying Rates to the Market Will Cost Borrowers More in the Long Run
Washington, D.C. – U.S. Senator Barbara Boxer (D-CA) spoke out on the U.S. Senate floor today against the student loan deal that will cost students and their families more money in the long run.
You can view video of Senator Boxer’s floor speech here.
“We have a stark choice to make… We can go with that deal that puts debt on the backs of our students, an additional $715 million worth of debt. Or we can go with the Reed-Warren alternative,” Senator Boxer said on the floor. “This is what we’re talking about: the deal will take $715 million out of the students’ pockets over the next ten years… This $715 million is going right on the backs of our families.”
Today, the Senate debated legislation that would tie student loan interest rates to market rates, offering low “teaser” rates for a few years, mortgaged through rate increases on future students. The legislation would link student loan interest rates to the 10-year Treasury bond, and if the last 30 years of the bond’s interest rates are an indication for the future, we can expect borrowers to pay well over the current interest rate of 6.8 percent.
For example, a student who borrows $30,000 to go to school and pays it back over 25 years could pay almost $8,500 more in interest under this legislation than under current law.
Senator Boxer also spoke in support of alternative legislation by Senators Jack Reed (D-RI) and Elizabeth Warren (D-MA) that would ensure no student, now or in the future, is harmed by higher interest rates. The alternative would set interest rate caps at the levels in existing law – 6.8 percent for all Stafford loans and 7.9 percent for PLUS loans, compared to the currently proposed 8.25 percent for undergraduate, 9.5 percent for graduate and 10.5 percent for PLUS loans.