SEATTLE (AP) — College students in Washington state say they need Congress to give them affordable student loans at a rate they can depend on, instead of a yearly debate on rising interest rates.
“The fact that it’s so unpredictable for students and their families … is pretty senseless,” Evan Smith, the student body president at the University of Washington in Seattle, said Thursday.
Smith, 21, is graduating this year with a degree in political science and said he’s found the student loan debate in Washington, D.C., academically interesting but frustrating in every other way.
“I fear that this is going to be the new normal in Congress,” said Smith, who has landed a job teaching in Chicago public schools through Teach for America.
Interest rates on new subsidized Stafford loans are set to double, from 3.4 percent to 6.8 percent, on July 1. Both Republicans and Democrats say they want to avoid the increase, but they’re divided on how to do it.
Republicans have proposed a variable interest rate for future loans, based on the rate for 10-year Treasury notes plus 2.5 percentage points. That would avoid a big hike now, but rates are likely to rise in coming years.
Smith said the lack of certainty about student loan costs, plus the fact that the Washington Legislature has not yet approved a state budget and tuition rates for next school year, is adding to student stress.
Congress needs to realize this yearly back-and-forth does not just have a financial impact; it has a psychological impact as well, Smith said.
“And just like the interest on a loan, it is compounding,” he said, adding that student leaders at the University of Washington also are telling lawmakers they need to get their act together.
Student loans are keeping some young people from pursuing higher education at all, said Zach Nostdal, 28, a graduate student in public administration at the University of Washington.
He has several friends who have chosen to work in construction rather than go to college because they can make a decent wage and avoid going into debt.
Nostdal is graduating next month with $35,000 in student loans and expects to repay around $350 a month for the next 10 years. Graduate students already have been paying 7.9 percent interest on new student loans since the last congressional compromise on student debt.
The former Peace Corps volunteer, who is currently interning with a Seattle’s public utility, said his job prospects are a lot less daunting than in 2010 when he first applied for graduate school.
But Nostdal will need to make a lot more than his current take-home pay of about $1,200 a month to afford his loan payments and a place to live in a city where one-bedroom apartments average more than $1,000. He currently shares a house with four other people and pays $550 in rent.
“I feel rather fortunate compared to many of my colleagues in school,” Nostdal said, adding that his loans have an interest rate of 6.8 percent. “Students just getting into the program are far worse.”
He questions the country’s priorities.
“In general, it’s ridiculous that students are being charged 6.8 percent interest, when you can get a mortgage on a house for 3.5 percent,” Nostdal said.
Copyright 2013 The Associated Press.