Student Loan Rate Increase Impacts Neediest Native Students Most
With the U.S. Congress’ failure to curb vastly increasing student loan rates, Native American college students are on par to become some of the greatest harmed in the nation.
Rates on new federal subsidized student loans doubled from 3.4 percent to 6.8 percent July 1 after Republicans blocked legislation that would have maintained lower student loan interest rates. That means it will take much longer for students to pay back loans after graduation, and they will be saddled with debt for much longer.
Carrie Billy, president of the American Indian Higher Education Consortium, says that this situation is especially dangerous for Native American students, since for many taking out federal student loans is unavoidable—especially for those who choose to attend public or private universities or who go on to graduate school after attending tribal colleges or universities, many of which do not offer advanced degrees.
“For these American Indian students—who have some of the lowest family income rates in the country and who will return to their reservation communities to work after graduation—doubling the interest rate on their loans could mean the end of their education,” Billy says. “They simply will not continue. They cannot afford to carry such a heavy financial burden.”
Billy also makes the case that high interest rate loans not only harm students and their families, they also hurt the economic progress of tribal nations and the country as a whole. “[E]very student we lose is one less student contributing to the rebuilding of our tribal economies and contributing to America’s future workforce,” she says.
Quinton Roman Nose, executive director of the Tribal Education Departments National Assembly, predicts that costlier student loans will cause major problems for Indian college students.
"The student loan situation is even more detrimental to Native American students, especially if the student quits school and then defaults,” Roman Nose says. “They are put in a Catch 22 situation where they probably won't be able to get a job that’s going to give them a chance to earn a living and make their student loan payments.”
On top of this, Roman Nose says that some colleges are not helping Native American students become aware of the long term effects of taking out student loans.
“With the loan interest rates subject to rise for all students, it creates a larger burden for our Native American students,” he warns, saying that financial education is especially important for such students.
Attempts to block the rate increase have currently stalled in the U.S. Senate, with S.1238, the Keep Student Loans Affordable Act of 2013, failing by a procedural vote of 51 to 49 on July 10. The bill needed to get 60 votes to proceed to debate. It would have kept the interest rate on federal subsidized Stafford student loans at 3.4 percent for an additional year.
Democrats have vowed to continue the effort to maintain lower rates. Sen. Martin Heinrich (D-N.M.) is one who has been working to prevent the increases through reauthorization of the Higher Education Act. "The Higher Education Act, the appropriate vehicle to change the way interest rates are calculated, doesn't expire until the end of this year,” Heinrich said in a statement. “Passing a year extension gives Congress the time to consider all the proposals in the context of containing college costs, not just loan rates."
After voting for the failed Keep Student Loans Affordable Act, a bill he cosponsored, Heinrich added, "Earning a college degree shouldn't be a luxury, but something that every American family can afford… We need to give students a fair shot at succeeding in a tough economy, not saddle them with debt."
Republicans are currently supporting a proposal that would reset interest rates each year, even as they rise–“a move that could cause student loan rates to more than double over the next 10 years, burdening students and families with more debt,” Heinrich said.
Billy, meanwhile, says that AIHEC and other Native education groups are currently working with national partners, led by the American Council on Education, to urge Congress to take action immediately helping to ensure that all Americans, including American Indians, have access to high-quality and affordable higher education.
“A key tool in making postsecondary education accessible and successful is affordable student loans,” Billy says.