The interest rates set for student loans expire July 1 – one year after Congress took action. Now, there’s a growing desire to come up with a longer-term plan.
Cliff Grassmick/The Daily Camera/AP
It’s déjà vu time for college students who are wondering what the interest rates on their federal loans will be for the coming year. For many, there’s a good chance the rates will end up being lower, at least in the short term.
In 2012, Congress managed to stave off a scheduled doubling of the interest rate on subsidized Stafford loans, for one year. But that represented only a small portion of student loans. Now, as the July 1 deadline approaches again, there’s a growing desire – both in Washington and among college-access groups – to come up with a longer-term plan that takes loan rates out of the realm of yearly political wrangling in Washington.
The Obama administration, House Republicans, and Senate Republicans have all proposed tying student loans to the interest rate the government pays in the market through the 10-year treasury note. Currently, the loans have fixed rates.
It could be a rare opportunity for compromise between the White House and Republicans on the Hill. Rep. John Kline (R) of Minnesota, chairman of the House Education and the Workforce Committee, touted his Smarter Solutions for Students Act Thursday as a plan based on the one the president incorporated into his budget proposal in April.
But the proposals have differences, and Senate Democrats have come up with some of their own ideas, leading to a complex landscape that may be tough to wade through in less than two months.
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