Student Loan Rates Double, Congress Fails to Compromise: Will Cost Students $2,600
Interest rates on government subsidized loans doubled before Monday morning as members of Congress failed to strike a deal. The increased rate could cost prospective college students thousands of dollars.
The interest rate on subsidized Stafford student loans jumped from 3.4 percent to 6.8 percent overnight as congress members failed to come to an agreement. If a new law to prevent the increase is not introduced, the average student can expect a $2,600 increase.
Democrats have blamed the increased rate on Republicans, who fear a growing deficit.
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"There is no deal on student loans that can pass the Senate because Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families, instead of closing tax loopholes for the wealthiest Americans and big corporations," Adam Jentleson, a spokesman for Reid, told Fox News last week. "Senate Democrats continue to work in good faith to reach a compromise but Republicans refuse to give on this critical point."
Republicans have proposed a different plan that would link the student loan rate to financial markets. President Obama formulated a version of this plan that was dismissed by Democrats in Senate.
"Why Senate Democrats continue to attack the president's plan is a mystery to me, but I hope he's able to persuade them to join our bipartisan effort to assist students," Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, said last week
Prospective students attempting to afford college will have the current generation of graduates to look up to. A generation so saddles with debt, that they have continued to put off major life decisions.
According to a recent survey conducted for the American Institute of CPAs by Harris Interactive, 41 percent are not contributing to their retirement, 40 percent have put off buying a car, 29 percent can't buy a house, and 15 percent have decided to delay marriage.
About 31 percent of undergraduates relied on government-subsidized Stafford loans to fund at least part of their education in 2011-2012, according to number produced by the College Board.
