Okay, kids, brace yourselves.
The fact that Congress is more concerned with things like a woman’s vagina and attempting to repeal the Affordable Care act than they are in coming up with a single jobs bill gives you an idea where it’s priorities are.
If you have a student loan for your college education, you certainly do not fall into their list of priorities since there is no agreement on any student loan plan that affects over 7,000,000 college undergraduates.
Because of this, borrowing rates for federal loans is set to double from 3.4 percent to 6.8 percent today.
There is a chance that Congress will eventually get around to coming up with a plan that can be applied retroactively, but if it doesn’t, if, for example God speaks to some in Congress and they go off again about a woman’s body, current college students will acquire an additional $2,600 in annual debt.
There have been three plans floated:
Senate Democrats want to freeze the current rate of 3.4 for another year; a bipartisan plan by Joe Manchin, a Democrat, and Richard Burr, a republican, would tie loan rates to the government borrowing costs, which would have the rates change from year to year; and the Obama administration plan, which would connect the rate to those same borrowing costs, but would keep the rate it was at the time of application throughout the life of the loan without changing from year to year.
Basing the loans on the Manchin/Burr plan could actually mean that students might get a loan at a lower rate at the beginning that would just increase as the economy grew. Based on the Obama plan it would be somewhat like a lottery in that the rate a student paid for the life of the loan, whether high or low, would depend on where the economy was when the student applied.
A Joint Economic Committee report showed that student debt has skyrocketed from $550 billion in 2007 to $1 trillion this year. About 37 million students currently bear the burden of outstanding loans.
The suggestion to leave the rate where it is for another year, and rewrite the whole process in the fall while there was time for proposals and debate did not go over with the Republicans who wanted an agreement now.
However the agreement that the republicans favor would mean that in three years the student loan rate would double from the 3.4 now to the 6.8 rate anyway. It would merely put off the inevitable while having it appear initially that things had been repaired. It would be putting another patch on the bike tire when you really need to get a new inner tube.
The Democrats proposed a one year extension leaving things where they are now which would pave the way for student loans to be reconsidered along with the reauthorization of the Higher Education Act in the fall. Their plan would keep subsidized student loans at 3.4 percent for the coming year.
"We need a one-year patch to keep interest rates from doubling on student loans," said Sen. Elizabeth Warren, D-Mass. "That buys us the time."
Congress is going on a July Fourth break. Perhaps when they come back, they will put attention on the student loan issue rather than all the other foolishness they have been engaged in, and not put this off until the last minute again.