Federal Student Loan Rates Set to Double Monday

Federal student loan interest rates are set to double on Monday as the Senate continues to shut down various proposals that would prevent the rates from instantly doubling from 3.4 percent to 6.8 percent.

Earlier this month, we wrote about Senate Republicans defeating a bill that would keep the rates at 3.4 percent for another two years. Two days ago, Senate Major Leader Harry Reid shot down a new bipartisan proposal that would link the rate to market based indicators.

“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,” said Reid spokesman Adam Jentleson to the AP. “Democrats continue to work in good faith to reach a compromise but Republicans refuse to give on this critical point.”

Part of the 2007 stimulus bill included provisions to gradually lower the 6.8 percent interest rate to 3.4 percent over four-years. Congress passed an extension of the lowered rate last year. Democrats want to keep the interest rate artificially low for another two years — an option that Senate Republicans want no part of. Republicans want to tie the interest rate to market-based rates, which would keep the rates low for now but leaves room for drastic increases in the future. Democrats don’t want to go forward with a market-based approach without a lower cap on how high the interest rate can go. President Obama submitted a compromised plan that would cap rates at 8.25 percent earlier this year but most Reid shot that plan down this week.

“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,” said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell.

The Congressional Budget Office estimates that the low-at-first rates would rise to 6.8 percent for 2017 and increase to 7.2 percent the next year under the compromise proposal that was shutdown.

“Any proposal that lacks a cap is a nonstarter and indicates that its proponents are putting their ideology above students and their families,” said Allison Preiss, a spokeswoman for the Democratic-led Senate Health, Education, Labor and Pensions Committee that Sen. Tom Harkin leads to the Washington Post.

Lawmakers can still pass a bill on July 4 when they return from the holiday and still meet the July 1 deadline requirement. For now, though, it looks like we’re in deadlock and college students will begin to pay more for federal college loans starting next week.

Your ad blocker is on.

Please choose an option below.

Sign up for our e-mail newsletter:
Support quality journalism:
Purchase a Subscription!

About the Author

Kevin Horne

Kevin Horne was the editor of Onward State from 2012-2014 and currently holds the position of Managing Editor Emeritus, which is a fake title he made up. He graduated from Penn State with degrees journalism and political science in 2014 and is currently seeking his J.D. at the Penn State Dickinson School of Law. A third generation Penn Stater from Williamsport, Pa., Kevin is also the president of the graduate student government. Email: [email protected]

‘It Was A Pretty Memorable Experience’: Penn State Club Baseball Wins Back-To-Back National Titles

After winning the Club Baseball World Series in 2023, the team repeated in 2024.

Penn State Women’s Soccer Announces 2024 Schedule

The Nittany Lions will open their season at home on Thursday, August 15.

Beaver Stadium Sixth-Toughest Place To Play In College Football 25

Ohio Stadium was the lone Big Ten venue ranked ahead of Penn State’s.

Other posts by Kevin

Hometown Brewery Releases Beer Honoring Evan Pugh

Penn State’s first president Evan Pugh was born in 1828 at Jordan Bank Farm, three miles south of the city center of Oxford, Pennsylvania, an hour west of Philadelphia in Chester County. One-hundred eighty-nine years later, an Oxford brewery is honoring one of the preeminent champions of “liberal and practical” higher education in the form of a delicious Porter.

Penn State Basketball Downs Colgate 72-59 In Front of Thanksgiving Eve Crowd

Why Honoring Paterno Still Matters