Debt Limit Stalemate Could Put Student Loans At Risk

CHICAGO (CBS) — If there’s no agreement on the federal debt ceiling by Tuesday, it could mean trouble for anyone who gets money from the government, including Social Security recipients, veterans and the millions of students who depend on federally-backed student loans.

CBS 2’s Dorothy Tucker talked to college students in Chicago who are extremely worried that they’re about to be cut off.

“I think it’s scary for students,” said Allecia Lowery, a sophomore at DePaul University.

Lowery said she is afraid that if lawmakers continue to fight over debt ceiling limit, she’ll feel the brunt of the battle. The sophomore at DePaul has four loans and two grants, totaling $41,000.

If lawmakers don’t reach some kind of agreement by Aug. 2, Lowery fears her student loans won’t be paid.

“My student loans have gone through already, so I’m hoping that they’re not going to take it (away), but if they do, then I won’t be able to go here,” said Lowery.

She is not alone. Nearly 80% of students at colleges around Chicago and the U.S. have some type of federally-backed student loans.

“That’s how I get to school, that’s how I can afford this,” said DePaul sophomore Selina Sepulaveda. “There’s no way I afford to pay out of pocket.”

The concerns are warranted, according to a spokesperson at the U.S. Treasury Department. The spokesperson said, “Without a debt limit increase, no payments can be guaranteed. There is simply not enough money to make them all.”

“It’s unbelievable,” said Keith Freeman, whose daughter wants to attend DePaul.

He is among the many parents who also worry about the future of student loans.

His daughter would like to attend DePaul. If she does, she’ll need help from the government.

“I never knew what a debt limit was until last year,” Freeman said. “I thought we were the country that made the money and spent the money and financed the money. Come to find out we’re the ones that’s in trouble. It’s sad.”

Chicago area colleges are bracing for the worst.

Administrators at DePaul, Columbia, Robert Morris, and the University of Illinois said they’re monitoring the situation and are committed to helping students if we see any cutbacks in student loans.


    Cut off the ILLEGAL IMMIGRANTS and leave the American citizens alone.

  • william wardrip

    i agree take care of us americans and cut everybody else off

    • Raymond Prudente

      GOP’s mission to create and to spur the economy by giving tax breaks to corporations and to the wealthy is unfair and immoral. New York Times reported that General Electric (G.E.) has an ace internal tax law team, didn’t pay any federal taxes, the corporate giant submitted and had a tax benefit of $3.2 Billion. It’s a lot of money! But G.E. announced that it has spent $3.2 Billion to buy a 90 percent interest in Converteam and Massey, France-based company. The move is expected to help the co. expand its global markets. G.E. also announced this week that it will move its X-Ray Unit to China. Whether it will expand jobs or economic growth in the U.S. is another question. the co. has not only been allowed to outsource thousands of jobs, it has increased its profit margin.

      Last year the relatively high U.S. corporate tax rate didn’t bother G.E. the largest corporation in this country-didn’t pay any U.S. taxes. Their tax crew chiefs who know the tax code are the ones who lead their corporate teams to the tax winners’ podium.

  • Raymond Prudente

    The Bush administration inherited $5 Trillion surplus from President Clinton but the GOP raise the debt ceiling to $9 Trillion. In 2008, stock market collapsed credit markets dried up, banks melted down, and unemployment began to soar. Our country was in recession not seen since the great depression. Hundreds of billions were spent to Iraq and Afghanistan and Billions $$$ cannot be accounted. President Bush and Congress agreed on a $262 Billion consisting mostly of “Tax Cuts for the Wealthy.” Unfortunately, Tax Cuts weren’t balanced by a decrease in government spending. This led to a $500 Billion budget deficit. By the time Bush left office the federal debt was already $10 Trillion, which leads to inflation over the long run.

    Bush bailout total: $1.632 Trillion mostly to selected “Large Corporations.” Since Obama has been in office, another $3.7 Trillion Federal debt tab. Congress has the responsibility to prevent the above meltdown and the current govt. default but incapable of protecting the citizen and students from this crisis. Politicians in Washington D.C. affords to bailout Corporate America and other countries with Billions$$$ and Trillions$$$! of taxpayers hard-earned-dollars.

    Estimated cost of Tax Cuts is almost exactly equal to the proposed cuts to Medicaid, students loan and other programs helping lower-income Americans. Corporations never pay tax-only people do! They collect taxes and pass them along to the government, and money pass on is not their money. Taxpayers printed money has been the medicine of the so-called recovery. stimulus bailout, bonuses…Enough is Enough!

  • Seekstudentloans :How to Finance Aircraft Mechanic School? | SeekStudentLoans

    […] Debt Limit Stalemate Could Put Student Loans At Risk […]

  • snicks

    if this doesn’t open EVERYONE’S eyes to the illegal immigration spending, nothing will. That is a huge chunk of money over the years that could have helped keep this county solvent.

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