May 21, 2013
TAKE ACTION: Urge your senator to support the Bank on Students Loan Fairness Act (S. 897)! Sen. Elizabeth Warren (D-Mass.) recently introduced this bill with the goal of offering students the same low interest rates that big banks pay.
On July 1, federal subsidized Stafford student loan interest rates are scheduled to double from 3.4 percent to 6.8 percent — a staggering rate increase that will leave millions of college students in financial crisis — while big banks pay a measly 0.75 percent on loans from the Federal Reserve. There is something very wrong with this picture.
Millions of college students will see their loan payments skyrocket on July 1 and the federal government will pocket more than $34 billion as a result. The Bank on Students Loan Fairness Act will cancel the scheduled doubling of the interest rate and reduce the amount to what big banks pay. For many students repayment of the debt, along with an outrageously high 6.8 percent interest rate, will be a very heavy burden. The amount of student loan debt is also a serious economic problem: the total currently exceeds one trillion dollars.
Often the connection between student loans and the gender pay gap goes unrecognized. Women need a college degree in order to make a decent living in adulthood. The lifetime earnings of a man with some college but no degree is about the same as a woman with a Bachelor’s degree. So it is small wonder that women take out more student loans, at 68 percent of women compared to 63 percent of men. But the same gender wage gap that makes that college degree so important for women also makes it harder for them to get out from under their student debt: According to a report by the American Association of University Women, men are paid an average salary of $43,000 one year after graduation in sharp contrast to the average salary of $35,000 that women are receiving. Even when women work in fields that are traditionally male-dominated, women continue to be paid significantly less.
Students of color face even greater challenges. According to the Center for American Progress, youth unemployment is almost double for people of color, making it that much harder to pay back their college loans. Women of color face the added burden of a race-based, in addition to a gender-based wage gap. While white women make about 77 cents to every dollar paid to a man, African American women and Latinas are paid only 64 and 55 cents on the dollar, respectively. And women are the sole breadwinners in about 54 percent of African American households and 40 percent of Latino households. When women lose out on income, entire families lose.
Only 37 percent of graduates are able to pay back their student loans on time, according to the Center for American Progress. Small wonder, then, that the prospect of crushing student debt is already deterring many women (and men) from earning college and post-graduate degrees — a tragic and unnecessary loss of talent that can only dampen the U.S. economy. Student debt also delays other achievements in life like homeownership, marriage, and raising children.
We must preserve the college diploma as a ticket to a better life, rather than an excuse to tether women to devastating debt. NOW fully stands behind Sen. Warren's Bank on Students Loan Fairness Act and urges you to do the same. Rep. John Tierney (D-Mass.) is sponsoring an identical bill (H.R. 1979) in the House. Bank on students and support this legislation!