That’s a one with 12 zeros after it. That’s the current amount of total federal student loan debt.
The Consumer Financial Protection Bureau announced that students reached that milestone Wednesday, as a group of Senators hashed out a deal on interest rates.
As you may already know, the interest rate on new, federally subsidized Stafford loans doubled on July 1, going from 3.4% to 6.8%. Late Wednesday after weeks of uncertainty, a bipartisan group of senators reached a deal that would include lower interest rates now, but much higher rates later. That deal, which ties rates to the financial markets, would still need to be approved by the Senate and House (the House previously approved a plan of its own). Until that time, the rate hike remains in place, and that’s forcing some to change plans.
Laura Olson, an SEA member who works at the Department of Labor, said the interest rate hike has had a significant effect on her daughter, a recent high school graduate.
“The doubling of the interest rate on Stafford student loans forced our daughter to start her college experience at a community college,” Olson said, adding that her daughter will work part-time and commute from home every day.
“She’ll forgo living on campus in a traditional four year college program to avoid unrealistic student debt that cannot be offset by earnings achieved by recent college graduates,” Olson said. “We are hopeful that the interest rate will come down so that educating our students does not become the impossible dream.”
The rate increase is also affecting those who are finishing their education.
Katrina Taylor just started a new job as a discrimination investigator for the Human Rights Commission after working for Employment Security. Her new job, she said, is a product of her seeking advanced education.
“I went back to school to get my master’s degree in justice,” she said. “The fact that I get to use it now is very good.”
She said the interest rate hike will hurt people like her, who are trying to get a better job.
“I’m spending good money to get the degree to begin with, so it’s just more on top of it,” Taylor said. “Luckily I was able to get my new job with the state and it did pay off, but now I’m wondering if I still won’t be able to handle this.”
Working in Claremont, she’s been able to live at home, which has saved her some money. With her new job, she’ll be moving to an apartment closer to Concord. She said the weight of debt has proved problematic for many people her age. According to a report by The Project on Student Debt, the average debt of a member of the class of 2011 was $26,600.
“We grew up with the notion of, you go to school, you buy a home and you have children,” Taylor said. “Looking at my life path right now, there’s no chance I could do all those things looking at what I have to pay back.”