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(NECN: Brian Burnell, Hartford, Conn.) - On July First the interest rate on federally subsidized student loans is set to double from 3.4 percent to 6.8 percent. With student loan debt already topping $1 trillion, many think the hike would make a bad situation even worse.
Connecticut's U.S. Senator Richard Blumenthal is one of them. He is calling on his colleagues in Congress to stop the hike, pointing out that the government makes a lot of money even with the rate at 3.4 percent.
"The United States Government will profit by $51 billion this year from students who are struggling financially to stay in school. We need to regard our students as an investment in our future. Not as a profit center," Blumenthal says.
Blumenthal wants to keep the rate at 3.4 percent temporarily but then he wants to go further. He supports Massachusetts' Senator Elizabeth Warren and her idea to drop the rate to 0.75 percent, which is the same rate the government gives to big banks.
"Why should the biggest banks have a rate of less than a percentage point and students be hit with 3.4 or, even worse, 6.8 percent?" Blumenthal asks.
Fairfield University math professor Irene Mulvey is president of the Conn. Conference of the American Association of University Professors. She echoes Blumenthal and adds she hears from alums who tell stories of putting off life decisions because of student loan debt.
"What jobs to take. Where they can live. Whether or not they buy a car. Whether or not they can buy a house. All sorts of life decisions are affected," Mulvey says.
Eric Bergenn is a senior at Central Conn. State University. As someone who is carrying student loans himself he's done some math on the difference between 3.4 and 6.8.
"The difference is almost three years worth of payments and almost $10,000 of interest payment. Not principle. This could mean three years putting off buying a house and, with the $10,000, the down payment on a house. This could be three years putting off starting a family," he says.
Making this a drag on the entire US economy.