Federal student loan interest rates, used by half of Alaska’s students, had been 3.4 percent for several years until doubling on July 1 to nearly seven percent, and a minority of senators blocked passage of a bill which would have returned rates to 3.4 percent. The nearly 20,000 students of the University of Alaska Anchorage come from all walks of life, ranging in age from mid teens to mid eighties, but each of us are working to better ourselves and were unfairly hit with a rate hike just as our country recovers from a deep recession.
Unfortunately, students who now are paying nearly seven percent are not much of a priority for the federal government in comparison to the major financial institutions of Wall Street which enjoy subsidized loan rates of 0.75 percent. The “Bank on Student Loan Fairness Act” backed by Sen. Mark Begich, along with other member of Congress, has proposed providing the same loan rates to students, which certainly would benefit the next generation of Alaskan professionals and leaders. Sen. Lisa Murkowski on the other hand has backed a “compromise,” similar to adjustable rate mortgages for student loans: Offering low rates in the short term and very high, and unpredictable interest rates later on, when a student would be trying to establish financial independence.
I have grave concerns about these developments. Allowing rates to double will burden Alaskan students with an average additional cost of over $1,000. Nearly half of the students at UAA and across the state are set to graduate in debt averaging over $14,000 for those taking out federal loans.
Without a timely fix, tens of thousands of Alaskans, and 7.4 million hardworking American students with Stafford loans will be expected to pay thousands more for their education. Such a dramatic hike on so many young men and women who are trying to get into the workforce and build strong futures and families, while subsisting on very tight budgets already, is not in our nation’s best interest. It is imperative that the Senate reduce rates to at least 3.4 percent – and ideally to 0.75 percent, the same rate which Wall Street pays to borrow money from the federal government.
Passage of the Banking on Student Loan Fairness Act would be a strong show of support for the next generation of doctors, lawyers, engineers and other professionals who will repay our nation in their lives to come by way of their work, not solely with their checkbooks; and would show that fairness, not favoritism is still the American way. Many lawmakers see student loans as a source of revenue and wish to keep the interest rates high, which is fundamentally wrong. The purpose of student loans is to allow those who otherwise would be unable to afford a higher education to pursue something greater for themselves and their communities.
Student loans are an investment in the next generation, in a greater tax base, and in a higher quality of life for each and every one of us. Federal loans should not simply be a scheme for the government to make more money in the short term, and it is about time our elected leadership saw it this way.
Our nation is already burdened by debt, with credit card and auto loan debt having been surpassed recently by outstanding student loans as the largest form of it. Unpredictably adjustable interest rates contributed to this recession, and whether they change based on the whims of Capitol Hill as they do now, or the Department of the Treasury as Senator Murkowski favors, both models fail our students.
It is about time the leaders of today worked with, and not against, the leaders of tomorrow and provided all of us, 7.4 million strong, with some peace of mind.
Andrew Lessig is University of Alaska Anchorage student body president and Alaska student commissioner of postsecondary education. Originally from San Diego, he now lives in Anchorage and wants to work in public policy.
Comments are closed