Student Loan Rates About to Increase

U.S. Senate Republicans have blocked consideration of a Democratic bill to prevent the doubling of some student loan interest rates, leaving the legislation in limbo less than two months before rates on subsidized federal loans are set to shoot upward, according to the New York Times.

Unless the two sides can come to some agreement, the rate will jump from 3.4 percent to 6.8 percent on July 1, newser.com reported.

Along party lines, the Senate voted 52 to 45 May 8, failing to clear the 60-vote hurdle needed to beat back a filibuster and begin debating the measure.

According to the Times, Republicans said they wanted to extend Democratic legislation passed in 2007 that temporarily reduced interest rates for the low- or middle-income undergraduates who receive subsidized Stafford loans to 3.4 percent from 6.8 percent.

But they oppose the Senate Democrats’ proposal to pay for a one-year extension by changing tax law that currently allows some wealthy taxpayers to avoid paying Social Security and Medicare taxes by classifying their pay as dividends, not cash income.

U.S. Sen. Lamar Alexander (R-Tenn.) wants to pay for it by eliminating a preventive health care fund in President Obama’s health care law.

The vote marked the 21st successful filibuster of a Democratic bill this Congress. Republicans have blocked consideration of the president’s full jobs proposal, as well as legislation repealing tax breaks for oil companies, helping local governments pay teachers and first responders, and setting a minimum tax rate for households earning more than $1 million a year.

American students took out twice the value of student loans in 2011, about $112 billion, as they did a decade before, after adjusting for inflation. Over all, Americans now owe about $1 trillion in student loans, and in 2010 such debt surpassed credit card debt for the first time. But the bill in limbo addresses only a portion of that burden.