A banner at a protest at Cooper Union in New York City. (Photo courtesy of Flickr user Michael Fleshman. Licensed under Creative Commons.)
This article was originally published by the Institute for Policy Studies website.
If lawmakers can’t come up with a solution, interest rates on federal student loans are set to double from 3.4 percent to 6.8 percent starting July 1. When I graduate from college in December, I will join the 37 million Americans with student loan debt.
For me, college has always been synonymous with financial stress. I have spent the last three years on financial aid, scrambling to finish all of my credits in order to graduate early and save on a semester of tuition at my university. If the interest rate on my Stafford loan doubles, I will have to continue to put my dream of law school on hold. The fear of sealing myself into a tomb of debt will prevent me from seizing opportunities at the time in my life when I am supposed to be taking risks.
The number of students and the price of college continue to rise every year. It shouldn’t come as a surprise that not only are more people taking out student loans, but they are also taking out more money. The average student loan balance increased by 49 percent between 2005 and 2012, and more than half of borrowers took out over $10,000 in loans. Total student loan debt is increasing at a rate of about $2,853.88 per second and it is approaching $1.1 trillion. In the last ten years, this number has nearly quadrupled and has already surpassed credit card debt and auto loan debt.
Of particular concern is the effect on women. According to the American Association of University Women (AAUW)’s study “Graduating to a Pay Gap,” 20 percent of women—compared with 15 percent of men—use more than 15 percent of their take-home salaries to pay off educational debt. This is directly related to the fact that women earn only 82 cents to every dollar that a man earns.