Higher (Priced) Learning: Student Loan Rates Doubled Today

Interest rates on student loans doubled today —  from 3.4 percent to 6.8 percent. The change impacts over 7 million students who are already struggling to repay loans as they begin their careers. It can add more than $20,000 over 10 years on federal Stafford loans.

Neither party wants the interest rates to jump to almost 7 percent, and yet here we are. Today, a temporary extension of lowered student loan interest rates is expiring. House Republicans passed a partisan bill that would have student loan rates float with the federal interest rates, which would currently result in a rate of about 5 percent but could go up to as high as 8.5 percent. Democrats want to lock in the 3.4 percent rate for two years, but were unable to pass anything out of the Senate because of a Republican filibuster.

Americans owe over 1 trillion in student debt, which is almost twice as high as the amount owed in 2007. In Texas, according to the Joint Economic Committee, the average graduate under 30 makes $49,112 and has $22,600 in student loan debt. And 56 percent of the class of 2011 has student loan debt. But skipping college altogether still leaves many worse off, as workers with a bachelor degree earn 68 percent more than workers with only a high school diploma.

Rep. Ruben Hinojosa (D-TX-15), who sits on the House Committee that oversees student loan rates, voted against the House Republican bill, saying, "I find it shameful that H.R. 1911 would reduce the federal deficit on the backs of students and parents by saddling them with almost $4 billion in additional loan interest charges and leave students worse off than if Congress allowed student loan interest rates to double on July 1st."

Rep. Gene Green (D-TX-29), who supported the Student Loan Relief Act of 2013, said in a statement, "As the cost of higher education continues to climb and total student loan debt eclipsed credit card debt for the first time, the consequences of inaction are unacceptable. We need to be making college more affordable for all students, not putting it further out of reach."

Sen. Debbie Stabenow (D-MI) is leading the charge to take up a bill on July 10, when the Senate comes back in session, to apply the 3.4 percent rate going forward and retroactively to the July 1 increase. But it's unclear if she has the support.

There's a lot of finger pointing and blame to go around regarding how we ended up in this student version of the fiscal cliff. We're now left wondering over the Fourth of July weekend whether Congress will come back and do its job, or whether college will become even farther out of reach for millions.  

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