By Rachel Brody |
In less than two weeks, more than seven million students and their families could see the rate on their student loans double from 3.4 percent to 6.8 percent. Allowing this spike in college costs for hard-working families would be a step backward and Congress needs to act to prevent it.
Sound familiar? We went through the same debate last year. Thanks to young people and their families who made their voices heard, both parties came together and extended the 3.4 percent rate on subsidized Stafford loans. But because the extension was only for one year, we're back here again.
One thing that's clear is that student debt is already having major economic ripple effects, keeping many young people from buying their first car or home, starting families and saving for the future. The good news is that both parties are engaged on the issue, with Democrats and Republicans coming to the table with their own proposals. The problem is that they take two very different approaches.
In May, the House passed a bill proposed by Chairman John Kline,R-Minn., of the House Education and Workforce Committee. The plan aims to create savings for students by tying student loan rates to market rates (currently at historic lows), but it would leave students vulnerable to future rate spikes and divert $3.7 billion from the program to deficit reduction instead of reinvesting in students. The result would be a spike in student debt of close to $4 billion over what borrowers are paying now.
Earlier this month, the Senate took up two bills – one proposed by Sen. Tom Coburn,R-Okla., which is similar to the House bill, and one proposed by Sen. Jack Reed,D-R.I. The Reed bill, which is fully paid-for by closing tax loopholes, offered a different approach that keeps rates low for two years and gives Congress the time it needs to pass a responsible, long-term solution to the student debt crisis. The Coburn bill failed to win a majority and the Reed bill fell short of the 60-vote threshold needed to break a filibuster.
The bottom line is that we need to have a real conversation about the best path forward on student loans, and any long-term solution needs to start with preventing rates from doubling on July 1. Time is running out.
Join us for a live debate on student loan rates on Twitter. Tweet using the #studentloans hashtag.
About Anne Johnson Director of Campus Progress
Jay Schalin Higher Education Writer at the John William Pope Center for Higher Education Policy
Debbie Wasserman Schultz Chair of the Democratic National Committee