Unless Congress acts, interest rates for federal student loans will double in July from 3.4 percent to 6.8 percent. President Obama today is beginning a push to encourage Congress to prevent the increase.
House Republicans, however, have been saying that they may not act to prevent the interest rate spike, falsely claiming that to do so would force them to cut other higher education programs. This is, of course, a false choice, as there’s no rule stating that offsetting funds to prevent the interest rate hike must come from the higher education budget.
On the Senate side, meanwhile, Democrats are supposedly putting together legislation to block the increase, but have yet to offer specifics:
Democratic senators have been vague about their intentions. “Senator Reid thinks that middle-class families and hard-working students cannot afford to see the interest rates on their student loans increase on July 1, and he will work with Chairman Harkin and others to prevent this from happening,” a Democratic senate aide wrote in an email…Reid’s office is expected to advance a message bill in a few months.
“I am deeply concerned about this issue and working with my colleagues to explore all legislative options to take action before the June 30th deadline,” Sen. Tom Harkin (D-Iowa), who chairs the Senate Committee on Health, Education, Labor and Pensions, said in a statement to The Huffington Post. Harkin, too, provided no specifics on funding.
It would cost about $6 billion to prevent the rate increase, at a time when federal student loans are already a profit center for the government. Already, outstanding student loan debt in the U.S. has, by some estimates, topped $1 trillion.