Last week, President Barack Obama unveiled his budget for the fiscal year 2014, ruffling a few feathers in the process despite a well-intentioned proposal addressing student loan interest rates.
Students at UC Santa Barbara joined the California Public Interest Research Group (CALPIRG) and the University of California Student Association (UCSA) for an April 11 press conference reacting to Obama’s proposal and entreating Congress to once again defer interest rate hikes while students hash out more comprehensive methods of reform.
Assembling outside The Arbor, a convenience store located at the heart of UCSB’s campus, student leaders and advocates demanded action, hoisting signs that read “Congress, Don’t Inflate My Rate,” gathering petitions and photographs to send to Congress, and signing their names to a “wall of debt” before exclaiming, “Mr. Obama, tear down this wall!”
On July 1 of this year, the interest rate on all Stafford student loans — which Congress currently determines by statute — is scheduled to double from 3.4 percent to 6.8 percent, compounding the cost of higher education and leaving many students to desperately scrounge funds to pay for school.
If all this results in a case of déjà vu for you, stay calm; you are neither delusional nor trapped in a time loop. Exactly one year ago, a nearly identical dilemma confronted college students across the nation. With the increase originally slated for July 1, 2012, President Obama — who, at this time last year, was bolstering his campaign for reelection — managed to keep disgruntled students at bay by advocating freezing rates at 3.4 percent. Congress complied, extending the low interest rates for a year.
Now, with the deadline fast approaching, Obama’s new proposal plans to take student loan interest rates out of Congress’s hands. Instead, it opts to tether them to a new system based on current market rates.
The Obama administration claims this market-based system would both keep interest rates from fluctuating and ensure that no borrower spend more than a 10th of his or her income on loans. Nonetheless, students are still worried about how much debt they will graduate with, fearing that the overhaul would keep rates low in the short-term but nevertheless result in larger dues down the line.
According to UCSB CALPIRG organizer Kat Lockwood, a whopping 44 percent of UCSB students have Stafford loans over $5,000. For these students, a post-grad future that might otherwise be bright and promising is instead fraught with serious financial concerns.
Although the Obama administration is eager to make higher education as accessible as possible, and is reportedly willing to work closely with students on this issue, those invested may want to keep abreast on the rate debate, which will only intensify in the coming months.