Maryland Parents and Students Get Hit with Higher Student Loan Payments
The average state student will have to pay over $2400 more on his or her college loans.
“Maryland students and families are getting hit with one of the largest interest rate hikes on student loans ever. Families across the country are pinching pennies so they can afford to send their children to college. They are willing to sacrifice a lot for a college education, but it is getting harder and harder as costs go up and student debt goes up too,” said Toby Chaudhuri, communications director of the Campaign for America’s Future, in a prepared statement to the press.
According to a report issued by the research arm of this public interest group, Maryland students will have to pay $2477 to $2981 more in college loans beginning Saturday, July 1. College students and graduates will be pushed deeper into debt as interest rates on Stafford loans—the basic student loan—have risen, effecting on that date, from 5.3 percent to 7.14 percent on old loans and to 6.8 percent on new loans.
Parents who take out PLUS loans to help their children pay for an undergraduate education also face rising interest rates. Rates on these loans will increase from 6.1 percent to nearly 8 percent for existing loans and to 8.5 percent on new loans, costing the average parent nationally an extra $3000 and $3953 respectively.
Campaign for America’s Future co-director Robert Borosage called these increases "a raid on student aid through acts of commission and omission." In a statement to the press, he said, “The failure of the current administration and Congress to make college affordable for all qualified students is a disservice to the country. The Republican leadership has....refused to allow a vote on a bill that would cut interest rates in half on new loans.”
The rising interest rates come at a bad time for American families attempting to pay for college, according to the report. Tuition at the average 4-year public university has increased by 40 percent since 2001, and nearly two-thirds of all 4-year college graduates now have student loans. Students and their parents are going further into debt, creating a burden that can be unsustainable. Student loan debt already causes 14 percent of young graduates to delay marriage; 30 percent to hold off on buying a car; 21 percent to postpone having children; and 38 percent to delay buying a home.
A copy of the Maryland student loan report is available here
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This story was published on July 2, 2006.