Sixteen MU students met with Sen. Claire McCaskill, D-Mo., Thursday to discuss their concerns about student loan interest rates, which are set to increase July 1.
Federally subsidized Stafford loans have interests rates that are capped at 3.4 percent for undergraduate students, a rate Congress approved in 2007. Barring further congressional action, the rate is set to double to 6.8 percent when the old legislation expires. McCaskill called the impending increase “a crisis of sorts.”
“I wanted to take some time this afternoon to talk about your lives and your futures and frankly the futures of many future students at this university and others,” McCaskill told the student panel.
The students, many of whom represented the Missouri Students Association and Graduate Professional Council, shared their perspectives on their student loans with McCaskill, who said she would consider their advice when the Senate debates the interest rate in June.
MSA Legislative Advocacy Officer Camille Hosman said she has watched the dialogue surrounding students loans change during her time at MU.
“Student loans aren’t seen by students as an opportunity anymore, but more as something where (students) know their hands are going get tied, Hosman said. “It’s less of an opportunity and more of a trap.”
Fifty-six percent of MU’s 2010 graduates had student loan debt, according to the Institute for College Access & Success. The average debt burden of a 2010 graduate was more than $22,000. Although most MU students graduate in debt, McCaskill said most students are able to pay off their loans. Four percent of students in Missouri default on their loan payments, compared with an average 12 to 13 percent of students nationwide.
Members of the Graduate Professional Council told McCaskill that they felt the Senate was neglecting the debt burdens of graduate students. These students do not have access to subsidized Stafford loans and pay the 6.8 percent interest rate already.
“I don’t want to be one of these four percent of people who default, but this is the first time I’m going to graduate with such a big debt that I’m not sure how it’s going to work out,” said Salama Gallimore, a graduate student in the School of Law who expects to graduate with more than $100,000 in debt. “There’s just a lot of questions that we have, and I feel like we should be part of the conversation.”
MSA Director of Student Communications and former Maneater staffer Jimmy Hibsch said the thought of paying off his student loans after graduation is “kind of scary.” He said taking out more loans to go to graduate school has made him question if he wants to continue his education at all.
“If, in fact, student loans are keeping people from continuing their education, that puts us at a global disadvantage,” McCaskill told Hibsch.
McCaskill is cosponsoring legislation which would tie the interest rate on student loans to the interest rate big banks pay on loans from the Federal Reserve. This rate, called the discount rate, is currently 0.75 percent.
The U.S. House of Representatives approved legislation that would prevent the Stafford loan rate from doubling by tying the interest rate to the market. Several students said they were concerned an adjustable interest rate would make it harder to make long-term financial plans.
“For me, that idea of a floating loan rate is scary” said Samantha Green, who will enter the School of Law in the fall. “I’m a planner. I have all my finances lined out and I know exactly how much I can spend every year for the next three years.”
