Interest Rates for Student Loans in the Air
While Congress fights, the date those interest rates for government guaranteed student loans is quickly approaching, the rate is due to double from 3.4% to 6.8% on July 1, not only is this important to millions of college students, but also to their parents, who will either sign or co-sign the loans for their children’s education.
The issue might also determine who wins the young votes in the upcoming presidential election. In the 2008 election, Obama took 66% of the vote from voters between the ages of 18 and 29. However, he is currently getting less of a percentage in recent surveys. This issue of interest rates could also move to another constituency, as both parties have attempted to blame the problem on the inability of the other party to agree to get things hammered out.
On July 1, over 7 million loans will increase to 6.8% unless changes to the policy are made. The increase in interest would add about $1,000 to the average loan said the White House. Both the Democrats and Republicans want the interest rate freeze extended, but the impasse is due to where the money would come from to pay about $5.9 billion.
The Democrats want payroll taxes to be increased on privately held companies, while their counterparts, the Republicans want spending cuts in programs aimed at promoting the prevention of certain diseases and in public health. In April, the House, which is Republican-led, passed a plan like that, but the Senate, which is Democratic-run, did not do anything with the legislation.