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US students now owe almost $1 trillion in student loans

By George Joseph
May 16, 2012 16:05 IST
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Fearing that hiking student interest rates would further increase the already ballooning education loan levels, academics and members of student unions make a fervent plea to the US Congress to subsidise such loans.

Unless Congress acts to stop the increased interest rates on new subsidised Stafford student loans for undergraduates, they are scheduled to double July 1, from 3.4 per cent to 6.8 per cent, affecting 7 million students around the country -- approximately 334,000 of them Asian American and Pacific Islanders, according to the US Department of Education.

"We strongly oppose the increase in student loan interest rates. Investment in education returns four times the investment in a very short period. Asians are very devoted to education and chances are that the community will be affected by such actions of the government," Professor Rishi S Raj, president, Society of Indian Academics, New York, said.

Kiran Ahuja, executive director, White House Initiative on the American Association of Physicians of Indian Origin, said, "Keeping interest rates on student loans low would allow more AAPI students to have access to an affordable college education and to develop the skills they need to be successful."

Navgeet Zed, newly elected president, student government association of Truckee Meadows Community College in Reno, Nevada, said that hiking student interest rates would "burden the future of our country with debt."

"At a time when going to college has never been more important, it has also, unfortunately, never been more expensive," said Education Secretary Arne Duncan. "Families and students are struggling to meet these costs, and there's no reason why we should add to their burden."

Even if Congress extends the lower rate this year, the debate is likely to come up again next year.

The Obama administration has taken significant steps to make college more affordable for all students -- increasing Pell grants and helping students better manage their debt after graduation with programmes like income-based repayment, which bases monthly payments on your income and family size, and public service loan forgiveness for borrowers who go into lower paying public service jobs.

Subsidised Stafford loans are based on financial need. Students may borrow $3,500 their first year in college, $4,500 their second year and $5,500 the third year and beyond, up to a maximum of $23,000.

Americans now owe about $1 trillion in student loans and in 2010, such debt surpassed credit card debt for the first time.

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George Joseph