Gathered in the shade on the steps of Suzzallo Library on Monday morning, Democratic members of Washington’s congressional delegation called on Congress to roll back the doubling of student-loan interest rates.
The rate on federal subsidized loans rose Monday from 3.4 percent to 6.8 percent, after Congress was unable to come up with a compromise to retain the lower rate.
“The cost of a college education has never been higher,” said U.S. Sen. Patty Murray. “Many students and their families are forced to take on mountains of debt to pay for a degree. … Because Congress can’t agree on a lot these days, interest rates are going to go up starting today.”
Monday’s news conference at the University of Washington was a kind of replay to a similar news conference at the UW’s computer-science building in April 2012. Then, as now, Congress was at an impasse over student-loan interest rates, with each side blaming the other for the delay.
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Murray — joined by Reps. Suzan DelBene, Rick Larsen, Denny Heck, Derek Kilmer and Jim McDermott — favors a bill that would extend the 3.4 percent loan rate over the next two years while a more permanent solution is found to keep interest rates low.
There are at least two proposals that would tie the interest rate to 10-year Treasury bonds, including one from the Obama administration that would lock in an interest rate at the start of each year.
Republicans have proposed a variable interest rate tied to the 10-year Treasury bond. Rep. Dave Reichert, R-Auburn, said in a statement Monday that House Republicans are the only group offering a solution.
“Returning control over student-loan interest rates to the free market is not only what the President asked for in his budget, but it is the best solution because it removes private financial concerns from government control,” Reichert said.
Washington Democrats oppose the House measure because “it ties the interest rates to the market without any safety net for students,” DelBene said. “Rates could go up dramatically, and this could hurt working families the most.”
Murray said doubling the interest rate will cost the average student about $1,000 over the 10-year life of a loan.
About 56 percent of Washington college graduates borrow money to pay for college, and they borrow an average $22,000.
U.S. Rep. Jim McDermott, D-Seattle, suggested a plan of action for the small number of students gathered to listen on Red Square.
“There is an answer to this, and it’s the cellphone,” said McDermott, waving his black phone in the air. “If every student started twittering and Facebook-hashtagging and what-all, whatever it is, if you started this in this country, by the time you got back to Congress in a week, the members would be yelling to bring the bill for a vote.”
Murray said Democrats want to make longer-term changes to the loan program to address broader issues, including whether the federal government should be making money on student loans.
The government makes about 36 cents for every student-loan dollar it offers, according to a February report by the Congressional Budget Office. Even subsidized Stafford loans turn a profit, bringing in about 12 cents per dollar. All federal loans combined are expected to bring in $34 billion in revenue next year.
Subsidized Stafford loans are offered only to low- and middle-class students in limited amounts.
About 104,000 Washington students are projected to take out that form of loan this year, DelBene said.
In related news Monday, the UW’s Board of Regents passed a budget for next year, announcing that tuition and fees for in-state undergraduates would be $12,397 a year.
Last week, the Legislature froze tuition at all state colleges and universities for a year but gave them authority to raise tuition the following year. The UW expects to keep tuition frozen for the next two academic years, said UW budget director Paul Jenny.
Most of the regents attended via conference call — the meeting was called hastily last week after it appeared the Legislature was going to approve a budget — and members said they were pleased by the lawmakers’ unexpected decision
to boost higher-ed funding by 12 percent after years of cuts.
“I just want to say how excited I am to be approving this,” said student regent Chris Jordan, by cellphone. “I never thought a tuition freeze would happen. This is a great thing.”
Katherine Long: 206-464-2219 or email@example.com.
On Twitter @katherinelong.