Congress Fails To Take Action, Federal Stafford Loans Double to 6.8%

college students

Image courtesy of Ambro / FreeDigitalPhotos.net

Congress failed to take action and strike a deal on federally subsidized Stafford student loan rates, causing them to double from 3.4 percent to 6.8 percent.

It’s possible for lawmakers to pass a bill that would undo the damage that’s been done. According to the Joint Economic Committee, students – if Congress fails to act – will pay an additional $2,600.

Democrats were looking to keep Stafford interest loan rates down so the poor and middle class students could continue getting their college education. Republicans want to tie student loans to the financial markets, rather than allowing Congress to set the federal lending rates. President Obama suggested a variation of the Republicans idea, which left fellow Democrats to block those efforts.

Don Steward, Senate Minority Leader Mitch McConnell’s spokesman, said he’s not sure why Senate Democrats continuously attack the plan the president has put forth.  Stewart said he hopes he can persuade them to assist the students in a bipartisan effort.

Harry Reid, Senate majority leader, said a proposal tying the loan rates to a 10-year treasury note would not pass the Senate and he would not be able to back something that failed to provide stronger protections for students and their parents.

Reid’s spokesman Adam Jentleson said no student loan deals would pass the Senate because Republicans are insisting the deficit be reduced using students and the middle-class families rather than eliminating the tax loopholes big corporations and wealthy Americans can take advantage of.

He said Senate Democrats are working in good faith on a compromise. However, it’s the Senate Republicans who refuse to give in on this important point.

Democrats, who took a recess for the Independence Day Holiday, will work on a one-year extension for present interest rates on July 10.

Elizabeth Warren, a senator from Massachusetts, said the party would rather have an all-inclusive student loan measure to ensure the longevity of universities and colleges. However, the 12-month patch, she said, does give Congress some time to deal with whole, complicated matter.

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Posted by on Jul 1 2013. Filed under Featured, Finance, New. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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