Student Loan Rates Set To Double Next Week

The interest rate on government-backed student loans is going to jump from 3.4 percent to 6.8 percent Monday according to NPR.

They continued on to say that Republicans, Democrats and the Obama administration could not agree on a plan to keep it from happening.

The Inquisitr first reported on the student loan rates doubling a few months ago.

The report stated that the rates where doubling because of the new budget plans being proposed by Congress.

The LA Times reported:

“A new report from the Joint Economic Committee showed that student debt has risen significantly, from $550 billion in late 2007 to about $1 trillion in the first quarter this year.

“The same report said that without congressional action, the higher Stafford interest rates would add $4,500 to the cost of a four-year college degree.”

For weeks, House Republicans have ribbed Democrats for failing to follow Mr. Obama, who proposed a market-based solution in his budget proposal for the coming year, according to The Washington Times.

Although rates will double on July 1, Congress can retroactively lower the rate hike as soon as they return from the break.

Sen. Tom Harkin, D-Iowa, the chairman of the Senate Education Committee, said none of the proposals circulating among lawmakers could win passage, and he urged lawmakers to extend the current rates for another year when they return from the July 4 recess.

Student already are struggling with debt, and many are defaulting. Others have high hopes that they will be employed as soon as they graduate, in hopes of avoiding default.

Nella Lipton expressed her concerns to NPR:

“And it’s kind of sad because you hear about everybody defaulting on their loans when they graduate, but I’m just hoping that with my major, I’ll be able to get a job,” Lipton says.

“They’re sort of putting the burden on a younger generation, and once we are old enough to vote and once we’re part of the economy and we … default on our loans, it’s going to be a big issue, and they’re going to regret it,” she says.

With the student loan rates set to double on Monday, many are worrying about what negative side effects this could pose. What do you think Congress should be doing?

[Image via Shutterstock/zimmytws]