LOS ANGELES (CBSLA.com) — A nearly $4 trillion budget proposal released by the White House Wednesday was met with some criticism by Southland college students.
KNX 1070′s Margaret Carrero reports the concerns stem from a plan to tie student loan interest rates to the U.S. Treasury borrowing rate.
President Obama’s plan – which mirrors a similar Republican proposal – has some students worried that student loan payments could skyrocket if inflation takes hold and pushes rates into double digits.
While some students won a reprieve last year when Congress approved a one-year extension of the 3.4 percent interest rate on Stafford Loans, that rate is set to double to 6.8 percent on July 1 unless lawmakers take action.
Under the plan, a loan currently based on 10-year Treasury notes plus 3 percent would have an interest rate of 4.75 percent, while a loan in 2007 made under the new proposal would have had an interest rate of almost 8 percent, higher than either subsidized or unsubsidized undergraduate loans available.
“We average about $25,000 in debt when we graduate, and to be able to try and get a job, to be able to try being successful in the world with such debt is really, really hard,” said UCLA Undergraduate Student Body President David Bocarsley.
The proposed $3.8 trillion budget for fiscal 2014 is aimed at reducing spending by an estimated $600 billion over the next decade, raise taxes and trim popular benefit programs, including Social Security and Medicare, the Associated Press reports.
(©2013 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)