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Today, the Arizona Public Interest Research Group (Arizona PIRG) joined thousands of college students across the country calling on Congress to stop the biggest student loan cuts in history when the U.S. House of Representatives takes up the issue in early February.
Just before Christmas, the U.S. Senate passed a bill that cuts the federal loan programs by $12.7 billion dollars. If passed, federal college loans will become more expensive for student and parent borrowers. Approximately 70 percent of these derive from higher loan interest rates for borrowers and from redirecting excessive student and parent payments to private lenders.
“ Arizona students will be financially squeezed by the proposed cuts,” stated Diane E. Brown, Executive Director of Arizona PIRG. “This move will only discourage eligible students from the middle and lower middle classes to attend to begin with and will be a huge financial obstacle for graduates.”
The bill generates at least 70% of its savings by making loans more expensive for borrowers: approximately $15 billion out of the $21 billion in total cuts. Specifically the bill generates:
- Almost $13 billion from excessive subsidy payments that student and parent borrowers make to lenders. This bill uses this money to pay for new tax cuts rather than sending it back to students through additional need-based grant aid or lower interest rates.
- Approximately $2 billion by increasing the parent loan interest rate from 7.9% to 8.5%.
“As the cost of higher education skyrockets, students are increasingly relying on work and loans to pay tuition bills. Millions of student borrowers struggle with student loan repayment each year; an estimated 39 percent of recent college graduates have unmanageable monthly loan payments,” said Brown. “A college degree must be affordable and accessible for families and students.”
College students across the U.S. have generated over 10,000 phone calls and hundreds of news articles about the cuts in the past two months alone. Today marks the sixth call in day nationally.
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