Pending Student Loan Rate Hike Challenged by New Bill
A law that slashed interest rates on federal student loans is set to expire this summer, prompting a group of lawmakers to introduce a new bill in the U.S. Senate to keep interest rates where they are.
When Congress passes the College Cost Reduction and Access Act in 2007, one of its goals was to make it easier for millions of U.S. students to repay their federal student loans. To do that, the act cut the fixed-interest rate on Stafford loans in half, from 6.8 percent to 3.4 percent. However, the law is set to expire on July 1. Without action on the part of lawmakers, the interest rate on subsidized federal education loans will double, returning to 6.8 percent. If that happens, new college loan borrowers will be looking at thousands of dollars more in interest payments over the life of their loans.
To prevent such a scenario from unfolding and causing additional hardship for millions of college students who rely on the loans to pay for college, a group of lawmakers — including U.S. Senators Patrick Leahy, D-Vt., Bernie Sanders, I-Vt., Jack Reed, D-R.I., and others — introduced legislation that would prevent the rate hike.
“It is already difficult for working families to afford college, and this would make a tough situation even worse,” Leahy said in a statement, referring to the fact that 60 percent of student loan borrowers come from families earning less than $60,000 a year. “No student and no family should have all opportunity stripped away for being able to afford a college education. This bill offers a timely jolt of relief by ensuring that students can at least have the best available interest rates” (“Leahy and Sanders Join Bill to Prevent July Interest Rate Hike on Stafford Student Loans,” Office of U.S. Sen. Patrick Leahy press release, Feb. 1, 2012).
The bill has been referred to the Committee on Health, Education, Labor and Pensions for further consideration.
