A couple of weeks ago, I had a chance to attend an event at the White House where President Obama urged Congress to prevent an increase in student interest rates. While there, I had the opportunity to meet with student leaders from across the country who understand the gravity of this issue: If interest rates double, it could prove to be devastating for millions of students and their families.
Interest rates on new subsidized Stafford loans are set to double from 3.4 percent to 6.8 percent on July 1. If this sounds like déjà vu, that’s because Congress faced this very same issue last year.
Now more than ever, Latinos should be worrying about their next test, having a good GPA, and not worrying that their student loan rate will double due to Washington’s inability to come together and keep student’s best interest at bay.
- Jose Aristimuno
According to a study by the College Board, 67 percent of Latinos rely on financial aid to pay for college. In addition, the average Latino student takes on an average of $22,886 in student debt. So with the economy still recovering, and so many of our brothers and sisters still hurting, there is no excuse for Congress to avoid making this a priority in their list.
Nationwide student debt presently exceeds $1 trillion, a number that will continue to rise if nothing gets done. With the current economy beginning to show signs of recovery and picking up momentum, now is not the time to increase student loan rates on millions of students. Doing so will not only damage our economy, but it will greatly impact the lives of millions of Latinos across the country.
In the past three decades, the act of attaining a college education has increased by more than 1,000 percent. On average, student loan debt surpasses $25,000, and 1 in 10 borrowers owe more than $54,000 in student loans.
With college costs skyrocketing, and Latino students taking on an immense amount of debt each year, many Latinos are starting to believe that going to college may not be the best investment. And with more Latinos enrolling in college each year, doubling student rates at a time when students need help the most would be devastating and could cause dropout rates to increase.
Just recently, House Republicans passed a bill proposing that interest rates be determined by the interest rate of a 10-year Treasury note, plus an additional 2.5 percent. In other words, the interest rates would fluctuate based on how much it cost the government to borrow that year. Although the Republicans’ approach would cap student loans at 8.5 percent, there is no guarantee that these loans will remain at their current rate.
As a Latino with student debt, I agree with the President that such rates should be fixed for the duration of the loan. The “Pay as You Earn” repayment plan, which considers a borrower’s income and then caps loan payments at 10 percent of that individual’s discretionary income, is the right approach that will ultimately help Latinos keep up with their payments.
Last year, millions of students took their voices to social media and used the twitter hashtag #dontdoublemyrate. This proved to be successful, as it indubitably played a part in forcing Congress to compromise and extend the subsidized rate for one year. This time around, the president urged students to use social media once again to pressure Congress to find a bipartisan solution.
Although a more permanent solution would be ideal, students should not fall victims of the current partisan politics that are taking place in Washington.
Now more than ever, Latinos should be worrying about their next test, having a good GPA, and not worrying that their student loan rate will double due to Washington’s inability to come together and keep student’s best interest at bay. At the end of the day, this isn’t about what is going on with the Republicans and the Democrats any given year on the floor and hallways of Congress; it’s about the future, livelihood, stability, and growth of our human capital and our country’s economy.
Jose Aristimuno is the founder of Latino Giant, a digital platform focused on empowering U.S. Latinos to reach their greatest potential.