Interest rates for federally subsidized Stafford loans are set to jump from 3.4-percent to 6.8-percent on July 1. And for the average college student already $26,000 dollars in debt, the idea of even more debt looming is troubling.
It was a similar situation in June, 2011, when Congress passed a measure keeping the rates low just days before the deadline. But U.S. Sen. Roy Blunt says proposals this year won’t pass without a compromise.
“There will be a couple of votes on student loans. Neither of them will pass. Neither the Republican proposal or the Democratic proposal,” said Blunt. “And that means we can get down to work and see if we can solve this student loan problem so that students have more certainty and access to loans at rates they will understand for a long time.”
Loan experts say Congress should pass something to keep rates low, but some don’t know what Congress will actually do.
“I do think there is going to be a lot of talk about doing something, nobody wants to see it increase,” said Leanne Cardwell, the assistant student loan commissioner for the Missouri Department of Higher Education. “Whether they can come to an agreement is anybody’s guess.”
Cardwell says if rates do increase, it will end up costing students about another one-thousand dollars per loan.
Two proposals that would prevent the interest rate hike both failed in the U.S. Senate on Thursday.
AUDIO: Matt Evans reports (1:04)