College students who are already feeling the pressure of a weak job market once they graduate are now facing the doubling of rates for the federal loans they secured in order to obtain a university education. More than 7 million college students who are currently paying 3.4 percent on their students loans will see a dramatic increase up to 6.8 percent unless members of the current Congress take action. So long as the students are enrolled in school, their federal loans do not accrue interest, but the doubling of the loan rates would prove to be a crushing financial blow for many once they graduated.
A group of Senators from both Republican and Democratic parties has expressed interest in drafting a bill for President Obama’s signature that would prevent the federal student loan rates from doubling, but they are in a time crunch to get this done before a mid-July deadline. Earlier this year, the Republican party was successful at having a bill passed that would tie the student federal loan rate to the cost of government borrowing, meaning that rates would fluctuate year after year. Republican officials are arguing that extending the current 3.4 percent rate for two years would cost the federal government too much money.
Senators offer plan to prevent spike in student-loan interest rate