Without action from Congress by July first, the interest rate on federal Stafford loans is set to double from 3.4 percent to 6.8 percent. U.S. Representative Ron Kind (D-WI) says allowing that to happen would be a huge mistake, and he’s hopeful a deal can be reached before then.
Interest was capped five years ago as part of an overhaul of the student loan program, which cut third parties out of the process. The move saved the federal government $80 billion, with some of that money redirected toward interest rate relief for loan recipients. The agreement will expire in July unless Congress renews the deal.
If the rates are allowed to double, Kind says it will likely make higher education inaccessible to millions of people. He says that could have a ripple effect on the nation’s economic recovery by “underfunding and closing the doors of educational opportunity,” denying the nation an educated workforce.
Republicans and Democrats largely agree an extension is needed, but differ on how to cover the estimated $6 billion price tag. House Republicans passed a bill that extended the current rate, but Kind says that plan is unacceptable to Democrats because it cuts funding for childhood immunization programs, along with breast and cervical cancer screenings.
Democrats want to pay for a one-year extension by ending certain subsidies and tax breaks for oil companies.
The Third District Congressman believes they will reach a deal before the deadline.
AUDIO: Andrew Beckett reports (1:11)
