Washington DC- Today U.S. Senator Bob Casey (D-PA), a member of the Joint Economic Committee, today announced the release of a new report showing a rising level of student debt in America and highlighting the need for legislation to stop student loan interest rates from doubling. The report shows that student debt has increased significantly in recent years, nearly doubling from $550 billion in the fourth quarter of 2007 to just under $1 trillion in the first quarter of 2013. The report also shows that 2011 college graduates with student debt in Pennsylvania faced an average debt of $ 30,581, and that the delinquency rate for student borrowers under age 30 in Pennsylvania stood at 14.5 percent in 2012. With interest rates on federally subsidized Stafford loans set to double on July 1, the report calls for swift action to prevent loan rates from increasing and new strategies to make higher education more affordable. Casey has cosponsored legislation that would prevent interest rates on federally-subsidized Stafford loans from doubling from 3.4 percent to 6.8 percent, costing students thousands of dollars in increased interest payments.
“Paying for college is a major burden for families and students, and Congress shouldn’t add to that by allowing the interest rate on student loans to double,” Senator Casey said. “Congress should come together around a bipartisan solution to prevent student loan rates from doubling which would prevent a significant challenge for families and hurt the economy. With ten days to go, it’s critical that Congress take immediate steps to protect families and students.”
The new report shows that 66 percent of 2011 college graduates have student loan debt nationally, compared to 70 percent of recent graduates in Pennsylvania. Student debt can negatively impact both individual Americans and the larger U.S. economy, since graduates with high debt may delay making key investments like saving for retirement or buying a home. Student debt may even impact a person’s career choices, deterring some graduates from taking lower-paying jobs in public interest fields like education.
New borrowers may soon face additional costs: if Congress doesn’t act, interest rates will double from 3.4 percent to 6.8 percent on new federally subsidized Stafford loans issued on or after July 1, increasing the cost of a college education by as much as $4,500.
Today’s report highlights the need for smart policies to ease the student debt burden and expand access to affordable options in higher education. State-by-state data on student debt is available in the full report, available here.