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Senate lawmakers last night agreed to a deal on student loan reform that could be voted on as early as Tuesday of next week. The new proposal makes long-term changes to the student loan system, which address Congress’ budget crisis by charging student loan borrowers more. This deal prompted the Arizona Public Interest Research Group (Arizona PIRG) to call on Arizona Senators McCain and Flake to vote against the bill.
“Student loans should invest in our future by making education affordable and accessible. Instead, the Senate is forcing students to pay more in order to reduce the deficit,” said Serena Unrein, Public Interest Advocate for Arizona PIRG. “When you look closely, it’s clear that the Senate is looking to solve their own problems, not those of students. This plan helps neither students nor the economy.”
This deal keeps interest rates and fees high, generating a projected $184 billion of revenue for the government over the next ten years, which will drive students deeper into debt. It also charges borrowers an additional $715 million, to be earmarked specifically for deficit reduction.
The deal does make a few concessions to students. It keeps a low rate of 3.85 percent for subsidized Stafford student loan borrowers this year and builds in caps to protect borrowers from unlimited interest rates later, since the rates will now be pegged to the market. However, Arizona PIRG pointed out that these additions do little to lessen the impact of higher student loan debt built into the overall plan.
“For a Senate desperate for ways to balance the budget, this deal seems great. But in reality, this deal socks student loan borrowers with $184 billion to pay in the form of higher interest and fees over the next ten years,” said Unrein. “The costs students must assume are not even related to the costs of the loan program, and this will only make college even more expensive for Arizonans.”
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