Student Loan Rates Double 2013: A Sign That Congress Needs to Get It Together
Congress officially has increased the interest rate for subsidized Stafford loans from 3.4 to 6.8%. Rightfully, there is outrage at Congress’ failure to extend the lower interest rate, and this is an unfortunate outcome for subsidized-loan borrowers as they are most likely to be the students who come from low-to-moderate-income families.
This year, about 7 million undergraduates received subsidized loans and the interest-rate hike will almost exclusively affect this group of students. Though this rate increase will not apply to loans made before July 1, 2013, this hike will affect millennials by up to $4,000 if they borrow the maximum in subsidized Stafford loans ($27,000) and keep to the standard 10-year repayment plan.
While $4,000 may be pocket change for some, the truth is that not every individual does well in the job market straight out of college and especially for those who struggle to get their careers launched and have other financial obligations, any extra money makes a difference.
Representative Donald Payne Jr. (D-N.J.) blasted the Senate delay, stating that it is "unfair and immoral." Considering the demographic the raised interest rate targets, he has a point.
"We are stunting the growth of an entire generation of entrepreneurs, innovators and leaders because some of my colleagues in Washington refuse to compromise," Payne said. "I will continue fighting to make sure that our students are given the chance to succeed by not being burdened with overwhelming debt."
Though Rep Payne should be commended for his stance on the issue, we would only hope that he will stay true to his words and be joined by more representatives who are committed to helping the next generation of working Americans.
However, Congress still has time to act and a group of 38 senators are now sponsoring a bill to grant a one-year extension of lower rates, a measure that would buy Congress time.
Though the success of this bill would be a nice turn of events, the fact that Congress pulled the same move last year is yet another disappointing reminder that the bipartisan bickering has gotten out of hand. Congress needs to stop looking for extensions and start working together to find a solution for this issue that could affect the future of millennials and the U.S. economy.