Senators Work To Forge A Compromise On College Loans
College and university officials, and many students and parents are watching closely to see whether Congress takes action this week on federally subsidized college loans. The interest rate on subsidized Stafford loans is set to double when the current rate of 3.4 percent sunsets on July 1st.
Both Republicans and Democrats say they want to head off the interest rate jump, but it’s been a tug’o’war between the parties as to how. Majority Democrats in the Senate have pushed for simply extending the 3.4 percent rate for an additional two years. That proposal couldn’t withstand a Republican filibuster and failed. The GOP majority in the House supports a measure that ties the rate to the fluctuating yield of the ten year treasury note - that would raise the rate to about 5 percent at the July 1st deadline, according to the Congressional Budget office. That house bill, has passed, and is generally supported by Senate Republicans.
So now the issue is back the Senate’s court.
“There’s a potential compromise in the Senate that will let rates go up a little above 3.4, that will follow the market a little more with new rates but lock them in lifetime once you have the new rates so if interest rates go up later it’s not such a hit ion that graduate’s finances," says Ohio Democratic Senator Sherrod Brown.
Trouble is, from Brown’s point of view, it doesn’t look like under that compromise the new rate would stay low for very long. Brown ardently supported the failed Senate bill that would keep the rate at 3.4 percent for the next two years, but he says he’ll vote for the compromise over passing nothing at all. And if it passes, he predicts republicans in the House and President Obama will go along with it rather than risk the political fallout of a sudden rate spike.