Rochester Students and Administrators Share Worries About Student Loan Hike with Hochul

Press Release

At a roundtable discussion today at the University of Rochester today, Congresswoman Kathy Hochul gathered students and education administrators to discuss efforts to curb the rising costs of education, ahead of the potential doubling of student loan interest rates on July 1st.

"Low interest student loans and Pell Grants are necessities for low and middle-income students who aspire to attend college every year," said Congresswoman Hochul. "With nearly 20% of undergraduates receiving Pell Grants here at the University of Rochester and about 60% of students borrowing through federal loans to fund their education, it is crucial we freeze interest rates at their current level to help make college affordable for our students."

"I applaud Representative Hochul for her efforts to maintain the interest rate for subsidized Stafford loans and to expand access to higher education," said Joel Seligman, President of the University of Rochester. "Stable and sustained funding for federal student aid programs--such as Pell Grants and student loan benefits - ensure that students can pursue high-quality higher education, which is a vital investment in our nation's future."

Last week, Congresswoman Hochul voted for the Interest Rate Reduction Act, which would freeze student loan interest rates at 3.4% for one year. However, she has also co-sponsored legislation that freezes these rates indefinitely. Additionally, in an effort to keep Pell Grants available for college students, Congresswoman Hochul voted against the Ryan Budget, which makes approximately $200 billion in cuts to Pell Grants over 10 years for low-income students, making loan repayment about $1,000 more expensive for each student annually.

In 2011-2012, approximately 2,350 undergraduates at the University of Rochester borrowed just under $10 million in subsidized Direct Loans (the loans subject to the rate increase on July 1st) for an average loan of $4,236. Additionally, approximately 1,035 recipients, or nearly 20% of the University of Rochester student population, received $4.3 million in Pell Grants, averaging $4,150 per student.

In 2007, Congress passed the College Cost Reduction and Access Act (CCRAA), which lowered student loan rates to 3.4% for a four-year period. The provision of the CCRAA that provides relief for student loans is set to expire on July 1st of this year, causing the interest rates on loans disbursed starting that date to double to 6.8%. If Congress does not act, the nearly 500,000 student borrowers in New York State for the 2012-2013 school year, and over seven million students nationally, will incur an additional $6.3 billion in repayment costs.

Hochul added, "Student loan debt now exceeds $1 trillion, surpassing credit card debt as the number one source of financial hardship for our young people. When we couple the doubling of student loan interest rates with the House budget's proposed cuts to Pell Grants, we are making an already expensive college education even more difficult to finance for most students. If the House and Senate do not come together and work out their differences in the next 58 days, nearly half a million students in New York State, and over seven million nationally, will see their loan interest rates double."

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