Portland, OR – Oregon’s Senator Jeff Merkley today called on Congress to block a scheduled July 1st doubling of the interest rate on student loans. Merkley met with students at Portland State University to highlight legislation he is sponsoring that would allow students to pay the same interest rate on their student loans that big banks get when they borrow money from the Federal Reserve.
“Higher education is the surest path to middle-class success and economic opportunity. The last thing we should be doing right now is making it harder for our students to get an affordable education,” said Merkley.
“Our students should get the same low rates that big Wall Street banks get.”
Student loan interest rates are set to jump from 3.4 to 6.8 percent, while banks can borrow from the Federal Reserve’s discount window at a rate of approximately 0.75 percent. The Bank on Students Loan Fairness Act would allow students to borrow funds at the same low rate that banks borrow from the Federal Reserve for a year, providing a window for Congress to find a fair, long term solution on student loan interest rates.
The Bank on Students Loan Fairness Act lets students take advantage of the same low interest rates offered to banks through the Federal Reserve discount window:
Sets Interest Rates for Government Loans to Students at the Same Level as Government Loans to Banks. The Act would provide a one-year fix to the impending interest rate hike by setting the rate for federal subsidized Stafford loans at the primary interest rate offered through the Federal Reserve discount window as of July 1, 2013.
Funded by the Federal Reserve, Administered by the Department of Education. The Federal Reserve would make funds available to the Department of Education to make these loans.
While the Federal Reserve would provide funding, the Department of Education would continue to administer all other aspects of the federal subsidized Stafford loan program in the same manner as it currently does.
“When more people can afford college, our communities benefit. Employers have access to a high-quality workforce, businesses have customers who can afford goods and services, and families have an improved quality of life. Investing in our students now will bring prosperity in the future,” said Ryan Robinson, Executive Director, Oregon Idea.
“As an instructor at Mt. Hood Community College, I see my students facing tough financial decisions every day and the threat of increasing interest rates compounds the problems they face,” State Representative Chris Gorsek said.
“I’m glad that Senator Merkley is working to help Oregon’s students.”
In Oregon, there are over 121,000 students with federal Stafford student loans that will be affected in July if Congress does not pass a solution.
The current average debt upon college graduation for Oregonians is $24,370.