Although both political parties have said they would like to keep interest rates low on federal-subsidized student loans, they can’t agree on how to fund it.
Senate Democrats today failed to get enough votes to push their bill on the issue forward. The “Stop the Student Loan Interest Rate Hike Act” would have extended the low 3.4% rate another year by funding it through new higher payroll taxes for some.
Meanwhile, Senate Republicans are pushing a proposal similar to the one passed by their House GOP brethren, which would fund an extension of that low rate by doing away with monies set aside under President Obama’s health care reform law for preventative care - a solution that Democrats are loathe to pass.
“Millions of college students are finding themselves without any legitimate voice in a national debate,” said Dylan Ratigan during his show May 8. “Washington and Congress playing election year theater with the financial rates of federal loans that are intended to be made available to the lowest income individuals in our country… It does highlight how the American Dream of college education is becoming less and less accessible.”
Two young guests on Ratigan’s show said they hoped Congress finds a solution soon. One of them, Zac Bissonnette, author of Debt-Free U, suggested that the government lower the interest rate to 0% on such loans, while also digging deeper to find solutions to the larger higher education crises facing students, such as skyrocketing tuition rates.
“The federal student loan program should be run at-cost; it should be like a credit union," Bissonnette said. "It should not be a source of revenue to fund other things."
Aaron Smith, cofounder of Young Invincibles, a youth activist group, noted this is a “popular issue for young people, students, their parents” – making it prime election year fodder, of course.
“We obviously can’t let student loans, the interest rates, double,” he added. “That would just add cost to college education, which is already out of control. We’re excited to see there is some progress on this issue, and we’re very hopeful that eventually Congress will work out their differences.”
The clock is ticking for Congress – and students. Rates will double to 6.8% this July if no compromise is reached.