Student loan rates set to double July 1
There doesn't appear to be any real movement to halt the increase, which could affect more than 7 million borrowers.
In the past, lawmakers have swooped in to extend low rates for students, or at least delay any increase. But this time around, there doesn't appear to be much political will to do that.
More than 7 million students have the federal Stafford loans that would be subject to the rate increase. Democrats set the rate at 3.4% before Republicans took control of the House in 2011, The New York Times reports. Republicans extended the low rate for one year last June, but it doesn't look as if they'll do it this year.
Lawmakers on both sides have tried to make political hay over the issue. Democrats are painting Republicans as the bad guys for allowing the rate increase through. Republicans say the market, not politicians, should set loan rates, and they have proposed legislation that would reset student rates each year with an 8.5% cap.
The Republican bill would cut the budget by $3.7 billion over 10 years, the Times reported. Then President Barack Obama unveiled his own proposal, which was similar to what the Republicans wanted.
Now the issue has stalled and lawmakers on both sides of the aisle are distracted by immigration and other hot-button issues.
Wednesday, five senators -- including three Republicans, an independent and one Democrat -- began pushing new legislation that would fix student loans to the 10-year U.S. Treasury rate. But Democrats are howling because that proposal doesn't have any caps.
Meanwhile, two Democratic senators are preparing a new bill that would freeze the 3.4% rate for one more year while Congress hammers out an agreement. But that bill probably won't see a vote until later in July.
Luckily, the Times reported, many students don't sign for new loans until August, so there is some time to work on a compromise.
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I'll preference my comments by agreeing that the financial aid system needs to be revamped to make the cost of attending college fair and equitable. That being said, it doesn't bother me that the rate is being doubled. As a parent of a full-pay student that has to take on unsubsidized loans at the higher rate of 6.8%, I believe all students should pay the same interest rate on their debt upon graduation, whether it's 3.4% or 6.8%. After all, it's the student's debt, not the parent's debt. Upon graduation, the playing field is level and each graduate has the same opportunity to seek gainful employment and pay back their loans. Why are kids with parents that earn a decent living expected to pay a higher rate. Seems unfair to me when we've already paid sticker price for our kid’s education. I don't have a problem paying the tuition, but kids shouldn't be penalized for their parents success.
The less educated our youth, the more social welfare programs we will end up having to pay for. We have enough problems competing in this global economy. Many other countries in the world actually provide free advanced education for their citizens and have a talented, skilled and innovative work force which contribute financially to those countries.
It's impossible, in this day and age, to get decent paying jobs without higher education. Corporations in the high tech fields just recently persuaded Congress to allow them to "import" foreign workers on corporate sponsored "work" visas citing the lack of qualified applicants here in the US. If more young people could afford a higher education, we wouldn't have to import talent from abroad and we'd be a richer nation for it. If we don't, the majority of our population will one day be doing the sweat shop jobs currently found in third world countries today.
Imagine the time machine bringing ANY founder back today to debate the intellectual trash constituting our government now
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