LA Weekly: Sen. Landrieu steps up and steps in fight to lower student loan interest rates
With cuts to higher education in Louisiana at a record high, are public universities still public?
That’s a question Sen. Mary Landrieu (D-LA) recently put forth as she works to promote two pieces of federal legislation aimed at making college more accessible and affordable.
“You could literally argue that they are no longer public,” Landrieu said during a recent telephone press conference with reporters.
Landrieu calls the Jindal administration’s severe “shredding” (by approximately $700 million over the past five years) of higher education, resulting in a steep rise in tuition in rates, “harsh, cruel and shortsighted to the Nth degree.”
At the University of New Orleans, tuition rates increased 45 percent between 2008 and 2013. For that same time period, rates increased by 36 percent at Southern University-New Orleans, and 26 percent at Xavier University.
For Jindal to talk about investing in Louisiana’s workforce while cutting higher education more than any governor in the state’s history, Landrieu said, is not “laughable” but rather “abominable.”
In addition to increasing affordability on the tuition end, Landrieu is a co-sponsor of a bill aimed at decreasing interest rates for student loans.
With nearly 40 million Americans carrying outstanding student loan debt totaling more than $1 trillion (surpassing credit card debt), the struggle to pay for college continues long after graduation.
In Louisiana, there are approximately 600,000 student loan borrowers with an average loan of $22,789.
Increasing affordability and reducing debt for college students boosts the economy as a whole, Landrieu contends.
“A college degree should help individuals build dreams, not debt,” Sen. Landrieu said in a press release.
Both pieces of legislation are part of Landrieu’s “Passport to the Middle Class” initiative.
The first piece of legislation, the CHANCE (Middle Class Creating Higher Education Affordability Necessary to Compete Economically) act, seeks to increase the amount of the Pell Grant award.
When the Pell grant was created in 1972, it covered the full cost of college. Today, it only covers about one-third of the cost of college nationwide, and about 40 percent of a four-year public university in Louisiana.
Landrieu’s CHANCE act, co-sponsored by Sen. Mazie Hirono (D-HI) and introduced in May, would increase the grant from $5,730 to $8,900 to better keep up with the rising cost of tuition.
The act would also restore year-round awards, so that students can continue to work and go to school during the summer months.
It also increases eligibility to 15 semesters, so that students who are working or have other obligations can have more time to complete their college degrees.
The second part of Landrieu’s “Passport to the Middle Class” initiative involves the Bank on Students Emergency Loan Refinancing Act.
The legislation was introduced by Sen. Elizabeth Warren (D-MA) in May, and is co-sponsored by Landrieu and 22 other Democratic Senators.
The act would allow both borrowers with private and federal undergraduate loans to refinance at 3.86%. On July 1, student loan interest rates increased, and many fear that they will continue to go up.
For undergraduate Stafford loans, rates rose from 3.86 to 4.66 percent. Graduate student loans went from 5.41 percent to 6.21 percent, and interest rates on Plus loans for parents increased from 6.41 percent to 7.21 percent.
The changes are part of a bipartisan deal brokered by Congress last year that tie the rates to the financial markets.
According to a “fact sheet” released by Warren regarding the act, “The biggest banks in the country – the ones that wrecked our economy and cost millions of Americans their jobs – pay next to nothing on their debt, while students pay nine times as much.”
The Government Accountability Office (GAO) recently projected that, on federal student loans made between 2007 and 2012, the government will bring in $66 billion in revenue.
“The legislation is fully funded by enacting the Buffett Rule,” states Warren’s press release on the Bank on Students act, “which would limit special tax breaks for the wealthiest Americans that allow millionaires and billionaires to pay lower effective tax rates than middle class families.”
Advocates of reining in student loan interest rates say that the current “crisis” of massive and debilitating student debt keeps Americans from buying homes, starting businesses, being active consumers, and saving for retirement — as well as hindering the nation’s economic recovery as a whole.
“Present student debt is crippling — economically, emotionally and morally — making this measure an historic imperative,” Sen. Richard Blumenthal (D-CT) said in a press release.
“Young people are postponing purchases likes homes and cars and delaying major life decisions – whether to get married and when to have children – because of crushing student loan debt. We should reward students who invest in their education, not punish them with high interest rates or profit off their backs. By allowing students to refinance their loans, this bill will give graduates a fair shot at better lives and brighter futures.”
Staffers from the Landrieu administration said that the bills are gaining momentum and support.
“The Passport to the Middle Class initiative increases access to higher education by restoring the potency of the Pell Grant when it was created and makes college more affordable by letting responsible borrowers take advantage of today’s low interest rates that homeowners and businesses enjoy,” Landrieu said in a press release.
“A basic American principle is when you work hard and play by the rules, you deserve a fair shot to build a prosperous future and earn a passport to the middle class.”
