Congress misses deadline, interest rates double on student loans

July 1 marked the deadline for Congress to act in order to prevent interest rates on student loans from doubling. The interest rate, which has been a fixed 3.4 since 2007, will now be 6.8 percent.

“I think it’s ridiculous how Congress can’t make a decision about giving students a break on their loans,” Sarah Beckman, a senior broadcast journalism major at Illinois State University, said. “What they don’t realize is that their indecision will cause students, which are future voters, to have a negative outlook on their government.”

The House passed the Smarter Solutions for Student Act in May, which would make interest rates on federal Stafford loans market-based. However, the White House and Senate Democrats oppose the bill despite Republican claims that it is a compromise and similar to the White Houses’ plan since both would tie interest rates to Treasury bond rates.

There are important aspects of the House bill that are different from the White House proposal and concern Democrats. While the White House plan would lock in rates when students take out a loan, the Smarter Solutions for Student Act would allow rates to change from year-to-year.

“Democrats have offered our colleagues multiple opportunities to freeze interest rates and ensure college remains in reach for millions of Americans,” House Minority Leader Nancy Pelosi said, according to The Hill. “Yet each time, Republicans said ‘no,’ choosing to push their plan to make college more expensive and saddle students and families with more debt.”

The Democrats’ solution has been to freeze the 3.4 percent interest rates for at least another year so that Congress can continue the debate and come to a reasonable long-term solution. However, these proposals have not been able to get the votes needed to pass either the House or Senate.

“Let’s make sure that we don’t charge so much in interest that the students are actually paying a tax to reduce the deficit,” Illinois Senator Dick Durbin said during an interview on WGN-TV.

Despite the apparent gloominess of the passing of the July 1 deadline, Congress still has time to act and make the expense of college a little more bearable for students this school year. Without a doubt, their failure to do anything has caused media outlets to disapprove and students to protest near the Capitol. If Congress does not come back from its recess with a change of heart and willingness to compromise, students will be stuck with the higher rate and the expectation that they should solve the government’s budget crisis.