UNC students to study Obama's student loan plan Tuesday
Posted April 23, 2012 10:46 p.m. EDT
Updated April 24, 2012 11:45 a.m. EDT
Raleigh, N.C. — University of North Carolina at Chapel Hill students will give a close and careful study to President Barack Obama's plan to keep interest rates on a popular federal loan program from going up.
The president will discuss the issue in a speech at UNC Tuesday afternoon, along with the University of Colorado at Boulder Tuesday and then the University of Iowa Wednesday. All three universities are in swing states that Obama won in 2012.
See Obama's speech at UNC LIVE on WRAL-TV and WRAL.com at 1:15 p.m.
For sophomore Karla Towle, the issue is personal.
"Tuition has gone up, and I'm basically living off loans," she said.
Obama is pushing Congress to extend a 2007 law that cut interest rates on a popular federal loan program for low- and middle-income undergraduates. If the law expires, the rates on subsidized Stafford loans will double on July 1, from 3.4 percent to 6.8 percent. The White House says it would cost 7 million students $1,000 more to pay off their loans.
"That would be a tremendous blow," Obama said in a speech this weekend. "And it's completely preventable."
Republican Mitt Romney, Obama's rival in the upcoming presidential election, throw his support Monday to keeping the student loan rates low. He also criticized Obama's economic leadership. "Given the bleak job prospects that young Americans coming out of college face today, I encourage Congress to temporarily extend the low rate," Romney said in a statement.
Towle wants answers from the president about what she and students like her can expect when they graduate.
"What should I expect when I graduate in two years? What do you think is going to be the scenario for me?" she asked. "Is it going to be easier to pay off the loans, or is it going to be more difficult considering our tuition was raised and the interest rates are going to double?"
Obama is expected to arrive in North Carolina shortly before noon, speak at Carmichael Auditorium around 1 p.m. and depart around 3:40 p.m. Traffic to and from the airport and in and around Chapel Hill is sure to be affected. Keep ahead of traffic delays and closures with WRAL's On-Time Traffic.
Two road closures in Chapel Hill are already planned:
- South Road, from Raleigh Street to Country Club Road, starting at 7 a.m.
- Cameron Avenue near Memorial Hall, starting at 9 a.m.
The president's visit – his first to Chapel Hill since being elected – comes two months after scores of angry students held a raucous protest as the University of North Carolina Board of Governors voted to increase tuition across the system of 16 university campuses by an average of nearly 9 percent, or over $400 a year.
The undergraduate North Carolina resident student currently pays an average tuition and fees of $5,294 a year, not including books and living expenses. It is higher at the system's two flagship schools, with UNC-Chapel Hill students paying $6,823 and North Carolina State University charging $6,964. Average annual tuition and fees at public four-year colleges in the U.S. rose 8 percent this year to $8,244 for in-state students, according to the College Board.
The North Carolina schools remain a bargain compared to other states. The University of Virginia charged new in-state students $11,794 for the 2011-12 academic year, while Penn State University charged underclassmen $15,100.
Perhaps because of the relatively low cost, only half of the 155,263 in-state undergraduates enrolled in the UNC system's schools took out federal student loans in the fall semester of 2010, the most recent period for which data is available. The 78,497 North Carolina-resident undergraduates borrowed a total of just under $254 million in federal loans, or an average of $3,236 per student.
The national debt amassed on student loans is higher than that for credit cards or auto loans.
The Federal Reserve Bank of New York has estimated about 15 percent of Americans, or 37 million people, have outstanding student loan debt. The banks put the total at $870 billion, although other estimates have reached $1 trillion. About two-thirds of student loan debt is held by people under 30.
Both the Obama and Romney campaigns are fighting for the support of voters buried in college debt and are championing what amounts to a one-year, election-year fix at a cost of roughly $6 billion. Congress seems headed that way. Members of both parties are assessing ways to cover the costs and win the votes in the House and Senate, which is far from a political certainty. All parties involved have political incentive to keep the rates as they are.
Obama carried voters between the ages of 18-29 by a margin of about 2-to-1 in 2008, but many recent college graduates have faced high levels of unemployment. That raises concerns for the president about whether they will vote and volunteer for him in such large numbers again.