Students watch, wait as Congress debates student loans

July 16, 2013

From “Students watch, wait as Congress debates student loans” — To save about $700 per semester on tuition, Adam Strozier dual enrolls at Milwaukee Area Technical College and the University of Wisconsin-Milwaukee.

Still, by the time he’s finished, the junior political science student will have racked up $23,000 in debt from federally subsidized student loans.


As Congress continues to struggle to reach a compromise on a stalemate that allowed the interest rate on the government-backed loans to double to 6.8%, students such as Strozier are left wondering how much more burdensome their debt loads are likely to become.

Last week, a Democratic proposal that sought to retroactively lower the interest rate on need-based loans to the previous mark of 3.4% failed in the Senate. On Thursday, it was reported that a bipartisan agreement was reached in the Senate similar to a bill passed earlier in the House, but that agreement later stumbled on a$22 billion price tag over the next 10 years.

Now, it’s back to the drawing board for lawmakers and the frustration continues to grow for local students.

“Our elected officials need to learn to work together and put aside party differences and come up with a solution that will meet the needs of millions of America’s students that have loans and are unable to afford them,” said Strozier, former president of Wisconsin Student Government, which represents technical college students across the state.

With millions of college students affected by rising rates on federally subsidized loans, local college officials and advocates are calling for a long-term solution that addresses the ever-growing debt burden facing students.

This past year alone, more than 30,000 students received federally subsidized loans to study in the Milwaukee area.

At Carroll University in Waukesha, 75% of its enrollment — or 2,113 students — received federally subsidized loans in the 2012-’13 academic year, said Dawn Scott, the director of financial aid for Carroll.

Next year, students receiving those loans will pay a 6.8% interest rate unless lawmakers can work to retroactively extend the previous 3.4% rate or agree on a market rate system tied to 10-year Treasury bonds that typically carry a low interest rate.

The doubled rate could cut deep for local students like Strozier and the more than 7 million others across the country expected to take subsidized loans to attend school this year. On average, those students could face paying back an additional $2,600, according to Congress’ Joint Economic Committee.

Strozier, a Milwaukee native, has spent the past year fighting to keep college as affordable as possible for financially struggling students who are looking to achieve education beyond high school.

Last month, he appeared with Rep. Gwen Moore (D-Wis.) during a news conference at MATC addressing the rate increase.

By the time the 25-year old Strozier is done with school, he will have received the maximum amount of subsidized student loans — $23,000. Only loans taken out after July 1 this year are subject to the rate increase, however, so he will not have to pay back the entire amount at 6.8%.

Unlike unsubsidized debt, subsidized loans do not accrue interest until after the recipient is no longer enrolled in school. Roughly two-thirds of student loans are unsubsidized loans, which already have an interest rate of 6.8%.

MATC financial aid director Camille Nicolai said nearly 11,000 MATC students received subsidized loans this past year and that each will be impacted by the rate bump differently based on their personal financial situation.

Still, Nicolai said she believed the 6.8% rate is too high for any student, regardless of whether they receive subsidized or unsubsidized loans. She said she supports any plan that will yield the lowest interest rates for her students.

Nicolai also said she advises every student to take out as few loans for as little money as possible to attend college.

“We have a motto here that is: ‘When you’re a student, live like a student, so you don’t have to live like a student when you graduate,'” she said.

At UWM, roughly 17,000 students receive subsidized student loans annually, according to financial aid department director Jane Hojan-Clark.

She also expressed concern about the increase.

“Given that only students who show financial need are eligible for the Subsidized Direct Loan, there is a sound basis to keep the cost … as low as possible so increased indebtedness does not further burden needy students,” she said.

Watching Congress

Marquette University spokesman Andy Brodzeller said the school is monitoring the debate in Congress.

“We believe a deal that incorporates a (rate) cap would be in the best interest of students and families,” Brodzeller said. “A cap would allow families to better estimate the cost of a college education and allow families to make the best decision for their individual circumstance.”

More and more, evidence is showing that student loan debt, which recently surpassed the $1 trillion mark, is having an adverse affect on the economy as a whole, according to Scot Ross of the progressive group One Wisconsin Institute, which conducts research and surveys relating to student loan debt.

Ross said that dealing with the need-based rate increase would be a start, but that “greater steps need to be taken to deal with this crisis.”

Ross said one key step should be the inclusion of more consumer protections for all student borrowers, such as the ability to refinance loans.

Strozier said he has seen a united front among students asking for relief from extra costs added to already growing tuition price tags.

“The federal student loan program should be a program to better our country by giving students the means to be educated and become productive and contributing members of society,” Strozier said. “Not a program to generate revenue.”


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: