It might be time for college students around the country to sound the panic button: The future of their student loan payments is dependent on Congress taking rare bipartisan action in the next two weeks.
On July 1, interest rates on new subsidized federal student loans will double from 3.4 percent to 6.8 percent. And while options to curb the rise are numerous, a consensus remains unlikely.
The Republican-controlled House passed the Smarter Solutions for Students Act in May, a loan reform plan that would link the student loan interest rates to a market-based rate plus an added 2.5 percent. The loan rate would never be higher than 8.5 percent, but could vary throughout a loan's life.
Though the legislation is fairly close to an outline President Barack Obama introduced earlier this year, the White House has threatened to veto the GOP plan. Under the president's plan, student loans would be tied to Treasury rates, but would add 0.9 percent more to the rate and would be fixed for the duration of the loan. There would be no cap on the loan interest rates.
In the Senate, the student loan debate is more complicated: Republicans and Democrats don't agree on a framework. And even Democrats want a different solution than does President Obama.
While the president would like to see a more permanent fix, he has said he could support the Democrats' plan to freeze the interest rates for another two years.
Senate Democrats want to keep the student loan interest rate at 3.4 percent and they have proposed paying for it by closing tax loopholes that benefit big gas companies and curtailing the use of tax-deferred retirement plans.
The last-minute scramble to find a solution and keep rates from doubling on student loans is nothing new. Last year, when this debate arose, the Senate and the House decided at the last minute to keep the student loan rates at 3.4 percent for one year, but the deadline expires July 1.
Democrats say the plan would be temporary and would give Congress a few years to find a more permanent fix.
"This is an issue of fairness. Instead of raising interest rates on families struggling to pay for college, Congress should close costly, special interest tax loopholes," said Sen. Jack Reed, D-R.I., one of the authors of the Student Loan Affordability Act. "A college education is an important investment in individuals and our nation's future economic competitiveness."
Democrats tried to move forward on the bill earlier this month, but were filibustered by Republicans who supported a plan similar to the one that passed by House Republicans.
But many Democrats have been candid that Republican opposition to their student loan plan may play in their favor as the 2014 elections approach.
Young voters have remained a reliable voting block for Democrats over the years. In 2012, Obama won voters between 18 and 29 by 22 points. Campaign operatives are optimistic that if Democrats and Republicans cannot find common ground, the issue may invigorate young voters to flock to the polls in midterm elections in 2014 and tip the scales to the Democrats.
"Several Senate Democratic leaders have basically already admitted to the media that they'd rather have a failed bill they can morph into a campaign issue than a signed bill that can help 100 percent of students," Minority Leader Mitch McConnell, R-Ky., said on the floor last week. "Well, it's time for that to change. And they shouldn't assume younger Americans will be that easily tricked in 2014. These young men and women may be drowning in the Obama Economy, but it's not because they're dumb. Or lazy. Or apathetic."
While the future of student loan rates hang in the balance, students are mobilizing. Hundreds of students representing advocacy groups took to Capitol Hill last week to express their disdain for Congress's inactivity.
"It is frustrating to see this back and forth sort of thing in Congress, when it really has an impact on students," says Samantha DeZur, a spokeswoman for the Education Finance Council, a group that represents student loan providers. "This debate shows how this program is not working. The political back and forth every single year is an example of how this program needs to be fixed."