Congress Allows Student Loan Interest Rates To Increase
Today is the day when Congress will decide if it is worth it or not to pass legislation that will prevent the interest rates on federal student loans from increasing.
Currently, rates are at 3.4 percent. However, if Congress does not act, that number will jump to 6.8 percent! Student loan debt in the United States has surpassed the $1.1 trillion mark. Raising interest rates will not only make it more expensive for students to attend college, but it will also cause that $1.1 trillion to increase to an even more dangerous amount! Clearly, this is a dire situation.
However inactive Congress might appear in regards to student loan interest rates, there have been proposals brought to the table with detailed, realistic plans on how to combat the problem. The difficulty is that no one can seem to agree on anything. Some of the proposals include:
- Congress has suggested a plan that would link student loan interest rates to 10-year treasury notes with caps on rates. The Flaw? As rates would be tied to Treasury notes and therefore the U.S. market, rates on loans would fluctuate.
- President Obama’s plan is similar to that of Congress’s, though his plan would not place caps on rates. The Flaw(s)? Because rates would not change, they might be really, alarmingly high. The Perks? Loan repayments would be limited to 10 percent of the graduate’s income. After 20 years. the loan debt would be retired.
- Ohio Senator Sherrod Brown introduced a proposal aimed at helping students with high amounts of student loans. The legislation would allow students and graduates to refinance their student loan debt into cheaper, more affordable loans. The Perks? This plan would not add any additional costs to taxpayers.
- Senator Elizabeth Warren, with the aid of Representative John Tierney, have introduced the Bank on Students Loan Fairness Act – a bill that would allow college students who take out new Stafford loans to pay an interest rate of 0.75 percent. The Perks? That is the same rate banks pay to the Federal Reserve for short-term loans.
- Senator Warren is also a co-sponsor of the Student Loan Affordability Act, introduced by Senator Jack Reed (D-RI). The Perks? This legislation would extend existing interest rates on subsidized Stafford loans for two years.
With all of these proposals on the table, it is absolutely ridiculous that Congress hasn’t reached an agreement on anything yet that would stop the student loan interest rate increase. Contact your congressional representative and urge them to support legislation that would prevent the interest rate increase on federal student loans! Send this article to five of your friends and have them do the same.Email This Post