The Illinois Student Senate will vote Wednesday on a resolution petitioning all members of the Illinois congressional delegation as well as the president of the United States to maintain the 3.4 percent interest rate cap on all federally subsidized loans. The resolution also calls for a $1,500 travel expense for senators to lobby this cause.
Shao Guo, senator and junior in ACES, supports the resolution sponsored by Senator Tony Fiorentino.
“I myself rely on financial loans and subsidized loans in order to attend this university, so I want the interest rates to remain the same so it would be easy for me to afford this education,” Guo said.
This resolution follows years of compounding student loan debt. As of March 2012, the outstanding student loan balance stands at about $870 billion, surpassing the total credit card balance of $693 billion and the total auto loan balance of $730 billion, according to the Federal Reserve Bank of New York’s Consumer Credit Panel.
Federal unsubsidized Stafford loans currently have a fixed rate of 6.8 percent and federal subsidized Stafford loans have a fixed interest rate of 3.4 percent. However, according to Federal Student Aid, the 3.4 percent interest rate on federally subsidized Stafford loans is currently set to double to 6.8 percent on July 1 of this year.
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Obama’s proposed budget entails eliminating interest rate caps to tie interest rates on student loans to the whims of the markets. Without a cap, future student borrowers will see the cost of college rise.
Guo points out the impact of this lobbying, if approved by senators, will add to the progress of the country in terms of financial well-being.
“In order for our country to keep up with the other countries in terms of colleges, we can, by making it more affordable for students to enter colleges,” Guo said. “One of the instruments to do this is financial aid and maintaining interest rates. It’s definitely something that will take a lot of money and it’s worth it as the future of our nation.”
Liz can be reached at [email protected].
