DeKALB – Aysha Flowers would like to save money to buy a house or a car, but instead her extra money goes toward $64,000 in debt from student loans she took out to pay for her Northern Illinois University education.
Flowers shared her story with Sen. Dick Durbin, D-Illinois, on Friday when the lawmaker met with students, alumni and NIU President Doug Baker to talk about a bill that would allow students to refinance their debt. Durbin expects the Senate to vote on the bill after it reconvenes Sept. 8. bill.
“The student loan indebtedness is now larger than credit card debt,” Durbin said. “It has grown so fast. And as a consequence we are finding a lot of people in delicate, compromised positions, because of the debt they took on as students.”
Durbin expects senators to vote on the bill, which he co-sponsored with U.S. Sen. Elizabeth Warren, D-Massachusetts, when the senate reconvenes the week of Sept. 8.
The bill would allow borrowers with Federal Family Education Loans or federal direct loans taken out before July 1, 2013 to refinance into the interest rates available to borrowers during the 2013-2014 academic year. Refinancing would reduce some students' interest rates from more than 7 percent to 3.86 percent.
Durbin said the interest legislation would be entirely paid for by enacting the Buffett Rule, which would limit special tax breaks for the wealthiest Americans.
Flowers, a 2012 graduate of NIU, has $40,000 in federal loans and $24,000 in private loans she used to pay for her bachelor's degree in communications. She has to pay $200 a month for her federal loans, which carry up to a 6.8 percent interest rate.
“Paying off my student loans would be critical to my life right now,” Flowers said.
Fellow 2012 graduate Jessica Ibares, just received notice that the first payment on close to $40,000 in student loans is due in November. She'll be able to pay about $50 a month, which will only go toward paying off interest.
A majority of students who complete their education at NIU have student debt. Rebecca Babel, the director of student financial aid said that about 75 percent of the students who graduate in the 2013-2014 school year and completed their entire undergraduate education at NIU. Their average federal loan debt was around $28,000, NIU data shows.
Lowering student loan costs could attract more students and prevent them from dropping out under the pressure of insurmountable debt, Baker said.
Behind the student loan debt is the rising cost of college. According to data from College Navigator, the average cost to attend NIU for the 2013-2014 school year was $28,000, up from around $25,000 only three years earlier.
Baker said the rising cost is a reaction to state funding, which has dropped by more than $25 million in the past 12 years. Locally, he said, NIU tries to provide students with programs that will land them a job after graduation while also adjusting personnel costs to avoid more tuition increases.
By the numbers: 75 - percentage of NIU students who graduated in 2013-2014 with loans $28,000 - average amount of student loans for students who completed all their course work at NIU and graduated in 2013-2014. 1.7 million - number of Illinois students with outstanding student debt Source: Northern Illinois University