Competing Congressional plans to fix student loan interest rates miss July 1 deadline as millions of students grapple with over a trillion dollars in debt.
Monday marks the deadline for a hike in student loan interest rates, an increase affecting 7 million students. Congress left town Friday without taking action to prevent the interest rates on new subsidized Stafford student loans from doubling 3.4 percent to 6.8 percent on July 1. Subsidized Stafford loans are low-interest rate loans available to students with financial need.
When faced with this issue last summer, Congress postponed the increases for one year. Lawmakers went home this time without an agreement on a long-term solution, though the Senate on July 10 will vote on a proposal that would extend the 3.4 percent interest rate for another year.
"As a result of their obstruction, the Democrat-led Senate will leave town and allow interest rates on some new student loans to increase on Monday," Senate Minority Leader Mitch McConnell, R-Ky., said before the recess.
White House spokesman Matt Lehrich said the Senate "will take action in the next few weeks to fix this problem. We are confident they will get there, and that the solution will include retroactive protection for students who borrow after July 1 so that their student loan rates don't double."
In assessing the best plan for establishing interest rates on subsidized Stafford loans, it's no surprise that lawmakers are split across party lines. As is the case on many important issues Congress is wrestling, partisan politics are at play.