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Student loan rates could double July 1

by Anna Oakes
Federal student loan rates are on track to double July 1 if Congress does take action before that date.

Two student loan rate proposals -- the Student Loan Affordability Act and the Smarter Solutions for Students Act -- failed to reach passage last week in the U.S. Senate.

Sen. Kay Hagan (D-NC) released a statement following the Senate's failure to pass a procedural measure required for consideration of the Student Loan Affordability Act, which would extend the current 3.4 percent interest rate on federal Stafford loans for two years.

"We must keep student loan rates low for 176,000 North Carolina students and their families, and I am extremely disappointed that we could not clear this procedural hurdle and get to work on keeping federal student loans affordable for middle class families," Hagan said in the statement.

"I urge my colleagues to come together on a bipartisan basis to find a way to keep these rates low and avoid putting one more burden on the shoulders of middle class families," she said.

The Senate also did not advance a proposal similar to the Smarter Solutions for Students Act, a bill co-sponsored by Republican Rep. Virginia Foxx of North Carolina's Fifth District that passed the House last month.

Hagan's statement indicated the senator voted against this proposal "that would have allowed interest rates to fluctuate, leaving students with uncertainty over rates that could skyrocket."

Foxx released her own statement in response to the Senate votes, accusing Senate leader Harry Reid of kicking the can down the road by seeking another temporary fix to student loan rates.

Foxx's statement said the House bill would return student loan rates to a market-based system.
"Students and taxpayers deserve a long-term solution for student loan interest rates that is not subject to the whims of politicians or campaign cycles," Foxx said in the statement.

"Our Smarter Solutions for Students Act is very similar to President Barack Obama's budget proposal for addressing interest rates, so it is a shame to see the President and Senate Democrats today let the opportunity to build upon common ground slip by."