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State Representative Patti Fritz
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-8237
For more information contact: Sandy Connolly 651-296-8877
NEWS COLUMN
Consolidate your student loans before July 1st
If you recently graduated from college or a technical school and are thinking of consolidating your student loans, act soon. As of July 1st, the interest rate on those loans is going up.
A recent announcement by the U.S. Department of Education indicated that interest rates on student loans will increase by almost 2 percent in July, bringing them as high as 7.14 percent for students, and up to almost 8 percent for parents who have taken out PLUS loans for their children. Consolidating before July 1st will lock in a lower interest rate; without consolidation, interest rates can continue to rise on a yearly basis.
This increase is the result of the Federal Deficit Reduction Act, which was signed into law by President Bush in February. This law will reduce government spending on student loans by about $22 billion, leading to an immediate increase in the interest rates. The other side effect is that consolidated loans will no longer have a fixed interest rate, as under the current law. Instead, consolidated loans will be variable-rate loans, subject to even more increases. The new law will also prohibit married couples from consolidating their loans, and students still in school full-time won't be able to consolidate their existing loans.
Recent changes in the state of Minnesota make this situation worse. Since 2003, state funding for higher education has been cut significantly, resulting in consecutive years of double-digit tuition increases.
A recent study shows the dramatic increase in tuition at a public two-year college in Minnesota. In 1996, average tuition was $1,800; in 2006, the same tuition was $3,994. This makes Minnesota the third highest in the nation when it comes to tuition at our community colleges- a distinction that is nothing to be proud of.
These escalating tuitions have increased the number of Minnesota students who turn to student loans to pay for their higher education. In fact, more that 76% of students in our state rely on student loans, and the total amount of those loans is increasing dramatically. According to a website recently released by a four-year college in Minnesota, the average debt load for their college graduates is close to $40 thousand; the low end was under $5 thousand and some debt went well over $100 thousand.
Imagine leaving college to start your new life, facing all the challenges that come with it – finding a job, housing, car payments, health insurance. Now, imagine starting down that path with monthly student loan payments amounting to hundreds of dollars. This is a harsh reality that is changing the face of our state and nation, holding back our young people and limiting their access to the American Dream.
In Minnesota, we have always considered ourselves to be above average, and we secured the future by adequately funding education. Our students consistently ranked among the top in the nation, and for years we remained in the top five when it comes to the percentage of our workforce with post-secondary education degrees. This educated workforce drove the economic engine of our state, resulting in a robust job market and personal income growth.
Over the past few years, instead of making these traditional investments in education, our state leadership dropped the ball and basically told our young people to fend for themselves. Because of the rising tuitions, record-high student debt and now, less federal funding and higher interest rates, more and more students will not be able to afford to continue their education. The future of our state depends on an educated and trained workforce; we need a new direction when it comes to higher education in Minnesota.
News Items
- STATE REP. PATTI FRITZ PARTICIPATES IN START OF LEGISLATIVE SESSION - (Posted: Jan 9 2013 3:32PM)
- Rep. Fritz: Homeowners, Farmers Need Property Tax Relief - (Posted: 2012-05-01 00:00:00)
- Rep. Fritz: Let’s Vote on a Bonding Bill that Benefits All - (Posted: 2012-04-19 00:00:00)
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