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FOR IMMEDIATE RELEASE: JUNE 17, 2013
Sterling, VA—On July 1, interest rates on Stafford student loans will double from their current 3.4 percent to 6.8 percent. More than 37 million students rely on Stafford student loans, and the American Medical Student Association (AMSA) is calling on Congress to uphold the current student loan interest rates.
On May 31, 2013, the House of Representatives passed a bill that caps student interest rates at an egregiously high 8.5 percent, resets rates each year, and eliminates much needed repayment flexibility for students. These changes threaten student borrowing capacity undergraduate and graduate students, which includes 86 percent of medical students with debt, according to the American Association of Medical Colleges (AAMC).
“There is a national shortage of physicians and a need for new physicians to join the ranks of primary care,” says Dr. Nida Degesys, AMSA national president. “If students are forced to take on more debt after graduation, this will make medical education more cost-prohibitive, impact the diversity of physician workforce, and further health care disparities. The burden of student debt must be reduced and maintaining low interest rate caps are vital for the financial well-being of young graduates.”
Currently, Stafford student loans are the most highly utilized by nearly 37 million student borrowers. These loans traditionally have a capped interest rate which is only enacted after graduation. For medical students, these loans are crucial, considering that they have an average of $160,000 in loans upon graduation, according to the AAMC in 2012. With the change to the existing cap, not only medical students but also undergraduate and other professional students will be forced into increasing debt, limiting their educational and career choices, and slowing our economy.
A recent study by the New York Federal Reserve Bank revealed that student loan debt limits growth and slows borrowing for other industries. The Center for American Progress predicts an increase of $21.7 billion in U.S. economic activity should Stafford loan rates remain low.
For more than 60 years AMSA has been in support of quality and affordable medical education for future physicians. AMSA believes low interest rates for student loans and improving the financial landscape for borrowing medical students will greatly improve the economy, the practice of medicine, and the well being of future physicians and patients.
About the American Medical Student Association
AMSA is the oldest and largest independent association of physicians-in-training in the United States. Founded in 1950, AMSA is a student-governed, non-profit organization committed to representing the concerns of physicians-in-training. To learn more about AMSA, our strategic priorities, or joining the organization, please visit us online at www.amsa.org.