Founded in 1975, OSA is a coalition of
student governments dedicated to the
representation, service, and protection
of the collective interests of over
100,000 students in postsecondary
education.
635 NE Dekum Portland, OR 97211
(503) 286-0477 Fax: (503) 286-0924
www.orstudents.org
FOR IMMEDIATE RELEASE: CONTACT:
June 22, 2006 Courtney Sproule, OSA Communications Director
(503) 286-0477; courtney@orstudents.org
Federal Student Loan Rates to Increase July 1st
Students encourage classmates to consolidate now!
As students recover from graduation festivities and decompress from finals, students are
encouraging their classmates to not forget about rising student interest loan rates that will increase as
of Saturday, July 1st.
On May 30, based on the last auction of Treasury bills, the interest rate for federal student
loans was set at 7.14 percent—almost two percentage points above the current interest rate of 5.3
percent. This increase would mean $2,000 in additional interest payments for the typical
undergraduate borrower with $17,500 in debt. As a recently released survey of 12 states found
Oregon to have the highest number of undergraduates who take out loans and their average debt to be
$17,772, Oregon students will certainly feel the impact of this increase. While the impact of high debt
levels on students has not been fully determined, a recent report released by the Oregon Student
Association found that high percentages of Oregon students could not manage their debt with the
starting salaries offered by many public service careers such as teaching and social work.
Students taking out new loans will also face a rate increase due to Congress’s approval of the
largest cuts to the student loan program in history this February. After July 1st, interest rates on
federal student loans will be at a fixed rate of 6.8 percent.
“The new rates for both current and new borrowers will only drive students further into debt,”
said OSA Board Chair and ASPSU President Courtney Morse. “Those of us who currently have loans
are looking at an outrageously high interest rate, while new borrowers will be locked into a high rate.
By offering students a variable rate capped at 6.8 percent, students will be able to take advantage of
lower rates during favorable market conditions while being protected from the kind of interest rate
surges that current borrowers are now facing.”
“But decreasing federal loan rates alone will not solve the problem,” asserts Morse. “The
Oregon legislature must reinvest in postsecondary education by increasing funding for need-based aid
and by not raising tuition by any more than increases in the Median Family Income.”
In the final weeks before the increased rate sets in, students who currently have loans should
look at their options for consolidation now. Even borrowers who have only one federal student loan
may be eligible to use the loan consolidation benefit to lock in today's lower interest rate.
Students can call 1-800-557-7392 or TDD 1-800-557-7395 or go to
http://www.ed.gov/offices/OSFAP/DirectLoan/consolid2.html to obtain specific information about
their potential savings. Again, now is the time to consolidate—the rates go up on July 1st.
Note: Please see accompanying fact sheet.
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