President Barack Obama announced a call to Congress to stop student loan interest rates from doubling in a speech on U. North Carolina-Chapel Hill’s campus Tuesday.
The interest rates on subsidized Stafford student loans are set to double from 3.4 percent to 6.8 percent for 7.4 million students July 1, unless Congress passes legislation to stop it. A crowd of 8,000 people packed the arena to see the president rally for Congress to keep the low interest rates and to talk about the importance of higher education.
With the recent tuition increases passed for the 16 UNC-System schools, including a 9.8 percent tuition increase at N.C. State, college is getting more expensive. In North Carolina, the double interest rate would affect 160,000 students and add $980 to the span of the average student loan, according to the White House.
Obama called on states, colleges and universities, and Congress to make higher education more affordable for all Americans. According to the White House, “The strength of the American economy is inextricably linked to the strength of America’s education system.”
Senior Dominique Garland introduced the president.
“With scholarships and loans I was able to have a holistic education, including internships and other opportunities. If the loan interest rate doubles, this could change,” Garland said.
“Higher education is the single most important investment you can make in your future. In today’s economy there’s no greater predictor of success than a good education,” Obama said.
According to Obama, the unemployment rate for Americans with a college degree is half of the national average, and incomes of college graduates are twice as high as those without college degrees. However, the average student graduates with $25,000 in student debt, and for the past generation of college students, tuitions and fees at most of America’s colleges have doubled. “Americans now owe more on their student loans than they do on their credit cards,” Obama said.
The president said he and his wife, First Lady Michelle Obama, have had their own experiences with college debt.
“Michelle and I, we’ve been in your shoes. When we graduated from college and law school we had a mountain of debt. When we married we got poor together. We added up our assets and there were no assets,” Obama said.
Obama said while his administration have taken action to help with student loans, like capping interest rates and setting up the Consumer Financial Protection Bureau, it’s not enough. He said colleges, universities and Congress have to do their part as well, and if colleges can’t stop tuition from going up, then funding they get from federal taxpayers will go down.
“Last year over 40 states cut their higher education spending and we’re challenging states to take a responsibility,” Obama said.
Obama also challenged Congress to give more young people the chance to earn their way through college by doing things like doubling the number of work-study jobs over the next five years, and stopping the interest rate cuts from expiring July 1.
“Stopping this from happening should be a no brainer. It shouldn’t be a Democratic or Republican issue. It should be an American issue,” Obama said.
Ending his speech, Obama referred to the “American Dream.”
“In America we admire success. We aspire to it. But America is not just about a few people doing well,” Obama said. “I want one of you to find the cure for cancer, the formula for fusion. Now is the time to double down on building an America that lasts.”
Michael Walden, a William Neal Reynolds distinguished professor and extension economist at N.C. State, commented on the effect the rate increase could have on the University.
“An increase in the interest rate on loans will increase the costs of attending college and likely reduce attendance by some potential students,” Walden said.
Jessica Schwartz, a 2010 alumna of N.C. State, is still paying off her student loans at about $62 a month. She took out $5,500 in student loans, mostly to fund a summer of studying abroad.
“Occasionally when I feel economically confident I’ll put in $100, but that’s rare these days. I believe I have about $1,300 to still pay off, and not counting interest I’d have about 20 more months to go if I consistently keep up the $62 monthly plan,” Schwartz said.
Schwartz said that while no one likes to owe money, she feels lucky she had the ability not to have a lot of student loans.
“I think that high interest rates are a big problem and they will deter people from going to college if it costs too much money. Education is important and school should be more affordable or future generations will suffer, either because people can’t further their education, or they can’t afford to pay off their loans after-the-fact,” Schwartz said.
Obama also filmed an episode of “Late Night with Jimmy Fallon” on UNC-Chapel Hill’s campus with the Dave Matthews Band, which aired Tuesday night. The show had a student audience from the University.