Certain student loans are scheduled to have their interest rate double in roughly three months if Congress does not interfere, as reported by the Los Angeles Times in an April 3, 2013 news article.
In 2007, Congress voted to lower the interest on student loans to 3.4% but now the governing bill is up for review. The failure of Congress renewing this bill will result in several student loans having an interest of 6.8%. It is unclear how Congress will deal with this pressing issue. Last summer Congress dealt with subsidizing Stafford loans, which gradually declined from 2008 to 2011. After several days of battling over the issue, Congress agreed to extend the lower rate on Stafford Loans. However, it is unknown what Congress will do with this interest bill.
At this time, the bill is scheduled to go before Congress on July 1st, unless action is taken prior. Several experts are predicting that Congress will not act prior to the deadline since the federal budget is still not fully agreed upon. Additionally, neither of the political parties has weighed in on the subject yet, showing that it is not on Congressâ€™s radar at this time. It is assumed that the House Republicans will argue to allow the doubling of the interest rates on the loans while the Senate Democrats will push to keep the rates at their current low rate.
The Stafford loans were created to help those students who were in financial need to obtain a higher education. They are given out based on the individualsâ€™ financial background and college costs. Under these loans, his government pays the interest acquired on the loan while the student is enrolled in school. The student does not have to start paying the loan back until they have completed their education. However, Congress recently put a cap on how much interest they will pay for each borrower.Â With student loans on the rise, it is unclear how Congress will deal with this issue in the months and even years to come.
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