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Brown Seeks Freeze Extension on Student Loans
YOUNGSTOWN, Ohio – Cary Dabney initially though it was a trick question when he was asked to speak regarding whether Congress should act to stop an impending increase in the interest rate many students pay on the loans that fund their education.
“Do we really have to rally around the idea of saving students money at this time?” he questioned. “As a nontraditional student and a father of six, I thought it was funny that we even have to ask, ‘Is this a good idea?’”
Nonetheless, Dabney, of Youngstown, was among the speakers at a news conference Monday at Youngstown State University where students joined U.S. Sen. Sherrod Brown to call on Congress to pass legislation to prevent the interest rate from doubling -- from 3.4% to 6.8% -- on federally subsidized Stafford student loans. A bipartisan agreement to maintain the current interest rate expires July 1.
Brown, D-Ohio, is a cosponsor of Stop the Student Loan Interest Rate Hike Act of 2012, which would maintain the current rate for another year while a “more permanent freeze” is sought, the senator said. The rate freeze would be paid for by closing loopholes that allow some shareholder-employees of S corporations such as law, lobbying, consulting and accounting firms to avoid paying Social Security and the Medicare tax by being paid “relatively small” salaries and taking the rest of their compensation in bonuses.
Unless the legislation is passed, the increase will hit about 10,000 students at YSU and 380,000 students statewide, Brown said. The average Ohio student graduating from a four-year school who has borrowed money owes about $20,000, and the rate increase would add about $1,000 to that.
That $1,000 may not sound like much but it is money that could be used for a down payment on a house or a car that might be built at the General Motors Lordstown plant, helping the economy, said Cory Okular, student body president.
Compounding the problem, college graduates “are having more difficulty in finding employment” and in many cases are underemployed, said Elaine Ruse, director of the office of financial aid and scholarships at YSU. “To add to the amount of money they have to pay monthly on their student loans is going to be a hardship, “ she said. “It’s a step in the wrong direction.” The average YSU student pays about $4,100 out of pocket toward YSU’s $8,000 tuition, she said. Also, due to state reductions in funding for grants students at YSU are relying more heavily on loans than they did three years ago.
Dabney, of Youngstown, is pursuing a degree in philosophy and religious studies. He's concerned that with the coming interest rate increase, he could still be paying on his loans into retirement.
“And worse yet, I have children behind me,” he continued. He will be joined by a daughter as a student “but my 2-year-old son who I thought I would be able to put money aside so he would be able to go to school debt-free” likely will have to take out loans as well when he reaches college age. “The perpetual cycle will begin,” he said. He and other nontraditional students aren’t asking for “loan forgiveness” but “loan sensibility,” he said.
Later in the day, Brownheaded to Eastern Gateway Community College in Steubenville, to discuss how his proposed Strengthening Employment Clusters to Organize Regional Success -- or Sectors -- Act could assist with preparing out-of-work Ohioans for positions in the oil and gas industry, which is seeing growth due to exploration in Marcellus and Utica shale plays. There are going to be a lot of jobs in manufacturing, transportation and drilling, Brown said.
“I want to make sure that those jobs are [filled by] Ohioans and not cowboys coming in from Oklahoma and Texas,” he said.
In a news release responding to Brown’s visit to Steubenville, the campaign of his Republican opponent this fall, state Treasurer Josh Mandel, claimed that the incumbent’s top priority isn’t job creation but maintaining the “delicate balance he has crafted between his ambiguous stances on energy issues and the radical environmentalists who support his re-election.”
The Mandel campaign did not offer a position regarding the student loan rate increase.
Copyright 2012 The Business Journal, Youngstown, Ohio.