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June 28, 2013

Congress to Miss Deadline to Avert Doubling of Student Loan Rates 
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Congressional lawmakers say it is unlikely they will reach a deal to
avoid the doubling of interest rates on government-backed student loans
before a deadline next week. Rates for government-subsidized Stafford
student loans to low-income students are set to rise on Monday from 3.4
percent to 6.8 percent. The rate would equal the percentage paid by
students with unsubsidized loans. The impasse centers around bipartisan
differences over whether to cap interest rates on consolidated loans and
whether government profits from the loans should go toward paying down
the federal deficit. Although lawmakers expect to miss the deadline,
Senate Democrats say they will hold a vote as early as July 10. Last
month, the Congressional Budget Office forecast a profit of $50.6
billion from the interest it charges students paying back their college
debt. Democratic Senator Elizabeth Warren has proposed a measure that
would lower student loan interest rates to 0.75 percent — the same
rate given to big banks on government loans.

 

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