Band-Aid legislation

Extending Stafford loan interest legislation is a temporary solution.

by Daily Editorial Board

Last Friday, President Barack Obama signed legislation that prevents the 3.4 percent interest rate for subsidized Stafford loans from doubling late last month. The 6.8 percent increase would have affected an estimated 7.4 million students expected to utilize the loans this year. Subsidized Stafford loans are awarded based on financial need, and the increase would have added an extra $1,000 to the average cost of each loan — making college even more unaffordable for those low- and middle-income families who rely on the loan in order to pay tuition. 13,600 University of Minnesota undergraduates received a total of $53 million in subsidized loans this year.

The $1 trillion amounted in student debt threatens the development of higher education and hinders the overall economic growth for the country. From 1992 to 2002, federal student loan debt jumped from about $80 billion to $280 billion according to federal data. 63 percent of graduates from the University of Minnesota had debt in 2010 — which amounts to an average of $27,578 per student according to the Project on Student Debt.

Although extending the increase is a relief for those graduating before year’s end, students who plan to take out the loan after June 30, 2013 will have to pay the doubled rate. The inexpensive Stafford loan gives students who would have otherwise not been able to afford college an opportunity to do so in a cost-effective fashion. The reality is, the government can sweep this issue under the rug for the next year, but eventually they’re going to trip over it. There needs to be long-term solutions going into the future so undergraduates don’t dig themselves deeper into debt.