Higher education advocates released new data recently showing that an anticipated increase in the student loan interest rate would cost Indiana students $270 million per year.
The increase would affect federally subsidized Stafford loans, which are provided to almost 7.5 million low and moderate-income students nationwide each year.
If Congress does nothing, then beginning July 1, the interest rate will double from 3.4% to 6.8% on new student loans.
"In today's economy, students need a college education to get ahead," said Gary Kalman, INPIRG Federal Legislative Director. "Doubling the interest rate for student loans would make this goal harder to achieve for thousands of Indiana young people."
"I'm already going to graduate with a mountain of student debt," said Brett Highley, student body president at Purdue University. "If Congress lets the interest rate double, then I'm looking at even bigger loan payments, and it's going to take longer for me to get on my feet financially after I graduate."
The average student borrower already graduates with over $25,000 in student loans.
On average, the doubling of the interest rate would add approximately $1,000 for every year a student takes out a loan, adding up to more than $4,000 over a four-year education.
To stave off the rate hike, Congress would need to act by July 1 to maintain the existing interest rate.
Without action, interest rates on these loans will double, resulting in significant new debt for future graduates.
A vote on the issue is schedule in the United States Senate for Tuesday.
"Student debt can change the shape of a young person's life," said Kalman. "When students graduate with high levels of student debt, it can force them to postpone major life events like marriage, parenthood and home ownership. It's important to minimize that debt, including keeping interest rates low, in order to reduce the impact it has on the lives of our graduates."