When President Obama gave his State of the Union speech in January, he briefly called on Congress not to let interest rates on student loans double come July. Well, yes, duh, that would be terrible for students, especially considering America's graduates already collectively carry $1 trillion in debt. But the president was not referring to a rhetorical situation. Interest rates on subsidized Stafford loans—only available to students with financial need—will double from 3.4 percent to 6.8 percent on July 1 if Congress doesn't extend the lower rate.
The New York Times reported this morning that Obama launched a campaign this week to rally support for the extension. Connecticut Democrat Joe Courtney has already introduced a bill to keep the 3.4 percent rate, but not one of its 127 co-sponsors are Republicans. Unfortunately, if Republicans focus on the loss that would stem from lowered rates, the issue could end up "landed deep in the chasm separating Democrats from Republicans," according to the Times.
Interest rates on subsidized student loans had been decreasing over the past four years, thanks to the 2007 College Cost Reduction and Access Act. From 2010 to 2011, they had held at 3.4 percent. However, those cuts had a deadline at which they would revert back to their original 6.8 percent rate—July 2012. Rising tuition, room and board costs (a 4.5 percent average increase for public four-year universities, and a 4.3 percent increase for private colleges in 2011) have made matters all that much worse.
Incoming college freshmen just got through one round of painful deadlines—hopefully their educations won't be thwarted by the loan rate due date come July.