Federally subsidized student loan interest rates doubled today, from
3.4 percent to 6.8 percent. Congress did not pass a measure that
would have stopped the automatic increase, and lawmakers are now on a week-long break for the July 4 holiday.
As a result of the rate hike, the average student can anticipate paying an extra $2,600 over the life of their loan, estimates Congress' Joint Economic Committee. Some 7 million college students who are set to take out school loans following the rate hike will be impacted.
Lawmakers are slated to meet after the break to discuss the interest rates, and a deal could possibly be hatched out at that time.
There have been a few bills introduced by Republicans and Democrats in both chambers to help combat the problem.
Tammy Duckworth (D, IL-8) Bill Foster (D, IL-11) and Brad Schneider (D,
IL-10) signed a discharge petition last week looking to bring H.R. 1595, the
Student Loan Relief Act of 2013, up for a vote before July 1, to no
The legislation looks to freeze student loan rates at
3.4 percent for the next two years. The discharge petition would have
avoided gridlock in Congress by requiring the House to
consider the legislation once a majority of the members in Congress (218) signed it.
Duckworth, Foster and Schneider are all cosponsors
of the Student Loan Relief Act, which was introduced back in April and
has more than 160 cosponsors. House Republicans failed to schedule a
vote on the bill.
Meanwhile, House Republicans passed a measure
last month, the Smarter Solutions for Students Act, that aims to tether
student loan interest rates to move with the markets each year. Under the plan,
loan rates would be adjusted annually based on U.S. Treasury rates. The rate would not exceed 8.5 percent. But
Democrats say the proposed legislation would raise interest rates for
federal student loans even higher than the 6.8 percent.
Also, a Senate plan, the Bipartisan Student Loan Certainty Act, crafted by U.S. Sens. Lamar Alexander (R-TN), Richard Burr (R-NC), Tom Coburn (R-OK), Angus King (I-ME) and Joe Manchin (D-WV) was introduced last week.
The measure would align student loan rates with the U.S. Treasury 10-year note.
There would be an extra 1.85 percent charged for undergraduate loans.
And under this system, graduate loans would see an additional 3.4
percent and 4.4 percent for PLUS loans. All the interest rates would
stay the same over the life of the loan.
long past time for Congress to take action. We can’t continue to risk
the long-term health of our economy and financial well-being of hard
working families because of partisan fighting,” Foster said in a
statement last week. “Providing a competitive, world-class education to
our children is essential to our country’s future economic growth. We
have some of the best educational opportunities in the world in the
U.S., but we must ensure they are not financially out of reach to our
students. This is about our future."