Massachusetts legislators, colleges and student advocacy groups are taking debt reduction matters into their own hands after Congress this week voted to double the interest rate on the popular, federally subsidized Stafford student loan.
The vote hikes the interest rate on Stafford loan from 3.4 percent to 6.8 percent, which puts an additional burden on the 7 million undergraduate students nationwide who can expect to graduate with an average student-loan debt of $26,600, according to the the national Project on Student Debt. Congress, when it returns from holiday break, could pass an extension to keep the rate low, thus saving the average student about $2,600, according to Congress' Joint Economic Committee.
Nevertheless, the Congressional action compelled the State University System of Massachusetts, which includes the Massachusetts College of Liberal Arts in North Adams, to freeze institutional fees for the upcoming 2013-14 academic year.
On July 16, a new subcommittee of state representatives and senators will officially convene to plan a series of public hearings this fall on student loans and debt, according to state Rep. Paul Mark, D-Peru.
"This is a hot topic and an important issue right now," said Mark. He is chairman of the new Joint Subcommittee on Student Loans and Debt and vice chairman of the state Joint Committee on Higher Education.
"Our goal is to look at why costs are so high, what is being done differently in Massachusetts as compared with other states, and what is being done differently in the U.S.compared to different countries when it comes to covering the cost of college," Mark said said.
Mark said he and his wife, both University of Massachusetts graduates, pay more than $750 a month in student loan payments; Mark said that kind of money could be equated to a mortgage payment, a down payment on a car or a nice investment in savings.
He also said student debt may be altering students' higher education decisions, from the school they attend to what they major in.
"We want good minds entering work in all areas. We need that," said Mark.
The new Joint Subcommittee on Student Loans and Debt, which includes members from each region of the state, has already been talking with groups that have a history of supporting fair costs for higher education and financial aid, like the Public Higher Education Network of Massachusetts (PHENOM) and American Student Assistance, which U.S. Sen. Elizabeth Warren has been working with this year.
When colleges are back in session and a public hearing series is scheduled, the legislator said he'd like to see all stakeholders attend: students and families, college representatives, employers and banks.
Mark said total costs, loan repayment programs and ideas for debt relief will be critical talking points during these hearings.
"The state alone isn't going to be able to solve all these problems, but a lot more can be done to find some solutions," Mark said.