Republicans in the US Senate stopped a debate on student loan interest rates earlier today. If congress doesn’t take action by July, interest rates will double to nearly seven percent. As Whitney Ray tells us, student loan debt nationwide is at a trillion dollars and growing.
Student loan debt passed the trillion dollar mark Tuesday morning according to finaid.org. In Florida, half of all college students graduate with debt. The average amount is 21-thousand dollars. Nationwide the average is 25-thousand.
The housing crisis is partially to blame for the recent spike in student loan debt. In the past families would sometimes borrow against their homes to pay for school, but with property values falling, banks aren’t as willing to take the risk.
But nearly no one is turned down for a student loan, and the money isn’t just for tuition. Some of it pays for room, board and even entertainment. While the debt grows, congress is being asked to freeze student loan interest rates. If they don’t act by July rates will double to 6.8 percent.
Vice President Joe Biden visited FSU earlier this year, and promised to lower college costs, but at least one student objected arguing that government assistant was driving prices higher.
“It creates this perpetual problem where tuition keeps going up so we give more subsidies and tuition goes back up and we give more subsidies,” said Lawrence Dunn who has 20-thousand dollars in debt.
Ed Moore, a member of Florida’s Higher Education Coordinating Council disagrees. Moore says Congress needs to freeze rates. And that 6.8 percent is artificially high.
“There is no economic justification, no market justification for an interest rate to be 6.8 percent,” said Moore.
Moore also says despite the rising cost, a college degree is still worth the debt. The state doesn’t keep records on the total amount students in Florida owe. It also has no financial obligation if a student can’t pay back the money. The debt stays with the borrower, because Federal law prevents people from shedding student loan debt, even if they declare bankruptcy.