In a little more than 30 days, interest rates on many new federal student loans are set to double – meaning college gets more expensive and more out of reach for millions of students and middle class families.
Sound familiar? That’s because we did this last summer. Students all over the country told Congress “Don’t Double My Rate,” and President Obama worked with lawmakers to keep the student loan interest rate from doubling to 6.8 percent in July of last year.
But now, absent further congressional action, the interest rate on new subsidized student loans is scheduled to go up again on July 1. To stop this from happening, President Obama put forward a long-term solution that cuts rates this year on nearly all new loans, ensures that all students have access to affordable repayment options, and does not charge students higher interest rate to pay for deficit reduction.
Democrats in the House and Senate have also put forward strong solutions that would accomplish the paramount goal of ensuring sure rates don’t double in 32 days, while keeping college within reach for middle class students and families. Unfortunately, the House Republican proposal doesn’t meet the test. It fails to lock in low rates for students and actually raises rates to pay for deficit reduction, instead of closing wasteful tax loopholes.
If Congress fails to act, 7 million students will pay about $1,000 more in interest on next year’s loans. And now is not the time to make school more expensive for our young people. As our economy continues to recover – at a time when interest rates are at historic lows -- the 7 million students who rely on these loans to finance their education shouldn’t face higher debt as they work to graduate, start a career or buy a house.