Statement by Center for Social Inclusion About Doubling of Student Loan Rates

FOR IMMEDIATE RELEASE
July 1, 2013
Contact:  Dennis Chin; 212-248-2785 x1450 or 609-954-2111; dchin@thecsi.org

Statement by Center for Social Inclusion About Doubling of Student Loan Rates

New York, NY – Starting today, over 7 million students’ federal student loan interest rates will double to 6.8% from the current 3.4%.

This is a disaster for all students, but particularly students of color. According to The Center for American Progress, Black and Latino students are more likely to borrow money and pay higher interest rates, especially for private student loans, than their White counterparts.  A doubling of interest rates would further increase their debt burden, make it harder to pay debts on-time, and possibly increase the likelihood of non-payment and even bankruptcy.

It is irresponsible to further burden our young people, especially at a time when our nation’s lack of employment opportunities, stagnant wages, and scarcity of affordable housing will make it harder for students to repay their student loans.  The widening racial wealth gap between whites and people of color, which has increased threefold during the past 25 years, further exacerbates the current and future financial outlook for people of color.  On average, blacks earn $0.69 cents of wealth for every dollar earned compared to $5.19 dollars of wealth for whites.  The doubling of student loan interest rates would make the American dream of attaining middle-class status more unattainable than ever for young people of color.  With people of color expected to be the majority of Americans under age 5 by this year or 2014, the well being of our nation as a whole depends on their ability to succeed.

There are common sense solutions to this crisis. Congress should:

  • freeze or decrease both federal and private student loan interest rates
  • provide more options and protections for repayment plans
  • expand the current loan forgiveness program to cover private loans and incorporate more occupations under the program.

While the above measures would not entirely solve the growing student debt burden, which stands at over $800 billion and has surpassed credit-card and auto loan debt, it is a step in the right direction to produce the healthy workforce and higher economic outputs our country needs.

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