FOR IMMEDIATE RELEASE
Contact: Haley Chitty
Director of Communications
June 27, 2012 -- Congress and the White House have reportedly reached an agreement to extend the 3.4 percent interest rate on subsidized Stafford student loans for one year. The deal would temporarily delay the rate from doubling to 6.8 percent on July 1. Experts estimate that this change would reduce costs for these borrowers by as much as $1,000 over the life of repayment or $6 to $9 per monthly payment.
To pay for part of the $6 billion cost of temporarily extending the 3.4 percent rate, lawmakers have reportedly agreed to permanently limit eligibility for these same subsidized loans to 150 percent of the program length. This means students in a four-year program would only be eligible for subsidized student loans for six years – three years for students in a two-year program.
The following is a statement by NASFAA President Justin Draeger in response to this proposal.
“We appreciate that lawmakers have come to an agreement that would extend the 3.4 percent subsidized Stafford Loan interest rate for an additional year. However, the extension is only a temporary fix to the problem. We therefore urge Congress and the Obama administration to engage in discussions that seek a long-term solution that would make student loans not only affordable for students and families but also understandable and predictable.
“The Congressional Budget Office estimates that limiting interest subsidization to 150 percent of program length will result in $1.2 billion in savings. While we regret to see permanent eligibility changes to the loan program made in order to fund this one-year extension, we are appreciative that a portion of the savings was found from outside of the education programs."
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents nearly 20,000 financial aid professionals at 2,800 colleges, universities, and career schools across the country. Each year, financial aid professionals help more than 16 million students receive funding for post secondary education. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.
Publication Date: 6/27/2012