Though programs have been introduced to lower the monthly payments of federal student aid borrowers, the Department of Ed's policies just kick the can down the road and lead ultimately to exponential growth in student loan debt burden for these borrowers and our nation's economy. Capping interest rates on all student loans at 3% would temper this growing economic bubble.

There are many relevant discussions happening about restoring basic consumer protections to student loan borrowers and even discussion of broad “student loan forgiveness.”

But one issue that is being ignored is the interest rates on these debts. Even in an era of historically low lending rates, borrowers who consolidated their loans at higher rates find themselves with interest rates that they can never refinance to take advantage of lower lending rates.

In the last decade Direct Loan introduced the Income-Contingent and Income-Based Repayment plans which include loan forgiveness after 25 and 20 years respectively. These income-based plans can lower lender monthly payments when their income is lower but in the meantime the principal on their debt spirals to higher and higher levels. Then as their income slowly rises they pay more and more on a debt that still continues to grow only larger if the interest rate is not modest.

Case in point, my husband is one of these borrowers with an 8% interest rate on a consolidated loan. After $33,000 of payments over the last 8 years on a $49,000 loan balance (which was originally a $27,000 loan he defaulted on due to hardship) his balance today is $55,000. On the other hand, my consolidated loan has a 3% interest rate. So even though the payments made on my loan total less that half of his, in seven years I have been able to reduce my $41,000 loan balance by $5000. Does this seem fair?

Consider that the Direct Loan program I mention is the Department of Education’s federal student lending program….and that the same federal government loaned TARP borrowers (aka banks) money with zero to 1%  interest rates…

Sign this petition telling the Direct Loan and the U.S. Department of Education to cap interest rates at 3% on all existing and future consolidated and unconsolidated student loans ….Many borrowers want to successfully pay back their student loans, just not pay them multiple times over in payments but NEVER reaching that goal and leaving them in growing danger of default.

We do not need another smoke and mirror reform that lowers monthly payments but does nothing to address compounding interest and growing principle balances.

Capping interest rates would curb the astronomical balance growth that happens for many borrowers within the first 5-10 years of repayment, devastating these borrowers financial futures...demand this real reform to student lending!