By Adela De La Torre
For many students across the country, going to college means getting student loans. As Ashley Ott, a fourth-year student at UC Davis explained, “My mom just told me that getting loans was a necessary evil, so that I could get an education at UC.”
The biggest threat to Ashley’s future, however, is the current congressional debate over student loans — a discussion that explores the possibility of changing interest rates, reducing loan caps and creating greater uncertainty about financing a college education for thousands of college students.
Ott, who was raised in a single-head-of-household family in the Silicon Valley, said there was no question that she would go to college, but she never anticipated her fear of getting student loans.
This fear, she said, was rooted in the fact that she also plans to go to medical school, after which her medical school loans, combined with her undergraduate student loans, could total more than $225,000. She knows that her educational mortgage may last for many years, but she is not ready to give up her dream of becoming a physician who treats those with the greatest needs.
Unfortunately, unless Congress Acts by July 1, the interest rates on new, subsidized Stafford loans will double — from 3.4 percent to 6.8 percent. This increase would impact 11,000 undergraduate students at UCD alone. Graduate and professional students also would be affected by the proposed legislation.
Students like Ashley Ott would then be faced with stark choices about how much debt they can afford and whether they can ever realize their professional dreams.
On principle, leaders in higher education stand together in supporting access for all students through affordable student loans. But despite calls for action to find a fair resolution before the July 1 deadline, hope is dimming quickly as the in-the-beltway gridlock in Washington, D.C., continues to get in the way of resolving this important issue.
For many students and their families, rising student loan rates mean making difficult choices, such as working an additional job, forgoing courses that might give them the competitive edge for graduate and professional school, or just saying “no” to four-year institutions to save funds.
In spite of bipartisan calls for a long-term solution, there is no agreement yet on a fix. Pending proposal include:
* President Obama’s fiscal year 2014 budget request, which would set a variable rate on Stafford loans linked to the 10-year Treasury rate, with different “add-ons,” for subsidized, unsubsidized and Grad PLUS and parent loans. Rates would be set each year and fixed for the life of the loan, without cap.
* HR 1911, the “Smarter Solutions for Students Act,” also would set a variable rate but with larger add-ons. Rate would be reset annually, rising and falling with interest rates.
* Other House and Senate leaders propose keeping the interest rate at the current 3.4 percent rate for two more years, while Congress considers changes to student loans in the context of a more comprehensive Higher Education Act reauthorization. The bill introduced by the Senate leadership would cost $8.3 billion, funded by closing tax loopholes unrelated to education.
We must move forward quickly. It is clear that a quick consensus in Washington, D.C., must be reached before July 1, following either the path suggested by President Obama or that proposed by the House and Senate leadership, which locks interest rates at 3.4 percent for the next two years until Congress can consider more comprehensive higher education reform.
We cannot, under any circumstances, support a bill like Smarter Solutions, which would create greater uncertainty about future student debt for our students. Such proposals would slam the door to college access for students like Ashley and make “debt fear,” rather than academic excellence, the deciding factor in pursuing a college education.
— Adela De La Torre is vice chancellor of student affairs at UC Davis.