Alaska Rate is Double the Rate for a Used Car Loan, 50% Higher than the Federal Loan Rate
FOR IMMEDIATE RELEASE
January 15, 2015
Juneau – Rep. Les Gara (D-Anchorage) and Rep.-Elect Dan Ortiz (I-Ketchikan) are pre-filing legislation to lower Alaska’s exorbitant student loan rate, which negatively impacts students chances for higher education and job training.
“We want to give Alaskans an incentive to bring needed job skills back to the state,” said Rep. Gara, who made it through college thanks, in part, to scholarships, work, and low interest loans. “We don’t want high student loan debt to discourage students from staying or returning to Alaska to work.”
The Alaska Student Loan Corporation charges Alaskans 6.7% interest for loans to go to college or get needed job training. The current federal student loan interest rate is 4.66%. The interest rate in Alaska is about 44% higher than the current federal rate, and is double the cost of a used car loan.
“Post-secondary costs are a significant burden that prevents many students and families from seeking the education and training they desire,” said Rep.-elect Ortiz, who’s a long-time high school teacher. “This bill takes a small step towards alleviating that burden and we look forward to working with our colleagues in the House and Senate to move this bill forward during the upcoming 29th Alaska Legislature.”
The pre-filed bill has provisions to incentivize Alaskans who get their education outside of the state to bring their skills back to Alaska or to finish their degrees and certificated job training courses. Students who stay in Alaska or move back receive a 2.5% reduction to the interest rate on their student loan. Students who fail to get a degree in a timely manner are encouraged to continue their education by getting the student loan interest rate discount once they get their college degree or certificate.
“We think this could be a no or low cost bill,” said Rep. Gara. “The federal government either doesn’t or barely subsidizes its 4.66% interest rate, depending on who you believe.”
“Hopefully, a low or no cost bill that benefits student who want to use their job skills can be passed this session,” said Rep.-elect Ortiz. “More skilled workers can only help the Alaska economy.”
The amount of outstanding student loan debt nationwide has increased by nearly 300-percent in the last eight years and is over $1-trillion dollars. Roughly 37-million American’s have outstanding student loan debt and the amount of student loan debt in the U.S. is second only to home mortgages.
The student loan reduction bill has been pre-filed and will receive committee assignments during the first days of the upcoming first session of the 29th Alaska Legislature, which begins on Tuesday.