By Sarah Schuch | email@example.com on July 01, 2013 at 5:15 PM
FLINT, MI -- Interest rates on most federally-backed student loans doubled Monday and one local legislator is calling lawmakers to act.
A provision of the federal Higher Education Act of 1965 -- which kept interest rates at 3.4 percent -- expired, causing rates to double.
State Sen. Jim Ananich, D-Flint, urged lawmakers to act quickly find solutions to alleviate the burden on college students and their families.
“Massive student debt hurts our ability to get people working and destroys a family’s chance to pull themselves out of financial trouble,” said Ananich, Democratic vice chair of the Senate Banking and Financial Institutions Committee, in a written statement. “We can avoid the next bailout and economic collapse, so let’s work together to find real solutions.”
The doubling of rates on the loans is effectively a new “college tax” estimated at $2,600 per student, the statement said.
A group of 38 U.S. senators are sponsoring a bill to grant a one-year extension of lower rates.
Ananich mentioned three proposals that would be worth considering, including:
- The “Bank on Students Loan Fairness Act,” which would let college students take loans that have the same low rate that banks get from the Federal Reserve.
- The “Michigan 2020 Plan," which would cover the tuition costs for every Michigan high school graduate by reducing outdated business tax loopholes.
- And bills which would gives tax breaks to for college graduates paying off student loans who stay and work in Michigan.