While the various factions of U.S. Congress seem to agree that the doubling of student loan rates on July 1 should not happen, disagreement continues on how to handle it.
U.S. Sen. Sherrod Brown, D-Ohio, held a conference call last week to announce his support for the Student Loan Affordability Act of 2013.
Interest rates on new student loans are set to double July 1, jumping from 3.4 percent to 6.8 percent. The legislation Brown said he supports would keep the interest rate at 3.4 percent for the next two years.
Brown said that more than 360,000 students across Ohio would be forced to pay thousands more each year in college loans unless Congress acts to block the doubling of the rate on federally subsidized Stafford loans. About 7 million college students across the country take out Stafford loans.
Meanwhile, the Republican-controlled U.S. House of Representatives approved its own GOP-backed student loan bill last Thursday that would tie loan rates to the interest rate on a 10-year U.S. Treasury note, plus 2.5 percentage points, with a cap that would stop the rate on Stafford loans from rising above 8.5 percent.
President Barack Obama has threatened to veto that legislation if it reaches his desk, which it is unlikely to do considering it would first have to get past the Democratic Party-controlled U.S. Senate.
Meanwhile, in the U.S. Senate another bill has been introduced by Sen. Elizabeth Warren, D-Mass., that would cut Stafford loan rates down to 0.75 percent for one year. Warren has pitched this plan as tying student loan rates to "the same low rates as banks get from the Federal Reserve."
That rate would be in place, Warren said, while Congress takes that year to figure out "a fair, long-term solution on student loan interest rates," according to Boston Magazine.
Brown said that student debt now exceeds $1.1 trillion, which he said is more than is owed by Americans in credit card debt as well as automobile loan debt. Student loan debt, he said, is second only to mortgage debt for Americans.
At Ohio University, Valerie Miller, director of the Office of Student Financial Aid and Scholarships, said last Friday that of the undergraduates who graduated between July 1, 2011 and June 30, 2012, 67 percent borrowed at some time through student loan programs.
The average balance per undergraduate borrower at OU came in at $27,060, data provided by Miller showed.
"We are certainly following the expiration of the 3.4 percent subsidized Stafford Loan interest rate on July 1," Miller said. "(We) remain hopeful for a long-term solution that will provide both reasonable interest rates and caps and flexible repayment options."
Brown noted that a rate increase would not apply to loans that are currently in repayment or that have already been disbursed.
"But students still attending school after July 1 that need to take out new federally subsidized Stafford loans would pay higher rates on the new loans, adding even more to their existing debt load," he said.