Student loan rates double without Congress' action - FOX 29 News Philadelphia | WTXF-TV

Student loan rates double without Congress' action

Posted: Updated:
DETROIT (WJBK) -

College students' interest rates are at the mercy of Congress.

The interest rates on subsidized Stafford loans doubled from 3.4 percent Monday and could stay doubled unless Congress fulfills its pledge to restore lower rates when it returns from the Fourth of July holiday.

Lawmakers from both parties, as well as the White House, vowed to lower that rate before students started signing loan documents this fall. But the rate now stands at 6.8 percent - higher than most loans available from private lenders.

"To have students saddled with a 6.8 percent rate makes no sense and it's going to put an increasing burden on a time when more and more students need to take out a loan in order to finish their college education," said U.S. Rep. Gary Peters (D-Bloomfield Twp.).

"My loans, the interest rate is like doubling so it's crazy," said L.J. Gamble, a senior at Wayne State University.

According to Wayne State officials, nearly 18,000 students, including law and medical school, received a Stafford loan for the 2012-13 year, accounting for 56 percent of WSU students enrolled in fall and winter classes.

"We don't have a say in it," said Prachi Patel, a pre-med student. "It was just done."

Efforts to keep interest rates from doubling on new subsidized Stafford loans fell apart last week amid partisan wrangling in the Senate. Democratic senators and the White House both predicted a deal would be reached in Congress to bring the rates down again before students return to campus.

But if an agreement remains elusive, students could find themselves saddled with higher interest rates this year than last. Congress' Joint Economic Committee estimated the cost passed to students would be about $2,600.

Students only borrow money for one school year at a time. Subsidized Stafford loans taken before Monday are not affected by the rate hike, nor are federal PLUS, Perkins or unsubsidized Stafford loans slated for the coming year.

Subsidized Stafford loans go to needier students and often are coupled with other types of lending. Those loans make up roughly one quarter of all direct federal borrowing.

Both political parties tried to blame the other for the hike and student groups complained the increase in interest rates would add to student loan debt that already surpasses credit card debt in this country.

Lawmakers knew for a full year the July 1 deadline was coming but were unable to strike a deal to dodge that increase. During last year's presidential race, both parties pledged to extend the 3.4 percent interest rates for another year to avoid angering young voters.

But the looming hike lacked sufficient urgency this year and Congress last week left town for the holiday without an agreement. Instead, the Democratic-led Senate pledged to revisit the issue as soon as July 10 and retroactively restore the rates for another year - into 2014, when a third of Senate seats and all House seats are up for election.

"Hopefully when we get back into Congress next week, we can pass legislation to make it retro-active, to make sure those students that enter this fall know that they have a 3.4 percent rate and not a 6.8 percent one," said Peters.

At the White House, a spokesman predicted a deal could be reached before students return to campus.

"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," Matt Lehrich said.

Even when lawmakers return, there's no guarantee there will be the votes to restore the lower rates. Efforts last week to reach a bipartisan agreement fizzled and there have been few examples of meaningful compromise in Congress.

- The Associated Press contributed to this report

  • Amy LangeMore from Amy LangeMore>>

  • Three arrested after military reservist killed during carjacking

    Three arrested after military reservist killed during carjacking

    Tuesday, July 29 2014 7:01 PM EDT2014-07-29 23:01:39 GMT
    A third suspect is under arrest in the carjacking and murder of a young man outside the Superland Market at Schoolcraft Road and Rutland Street Monday night.
    A third suspect is under arrest in the carjacking and murder of a young man outside the Superland Market at Schoolcraft Road and Rutland Street Monday night.
  • Fire from lightning strike devastates Roseville church

    Fire from lightning strike devastates Roseville church

    Tuesday, July 29 2014 12:10 PM EDT2014-07-29 16:10:35 GMT
    A raging fire happens in Roseville and of all places to be struck by lightning - the steeple of the New Life Church of God in Christ.Pastor Darrell Moore and his family are devastated."I got here and I found out I really didn't have a church anymore, " he said. Moore was attending a Sunday evening service at another church, when a member of new life called him repeatedly. When he finally answered, it was bad news."The fire department was here, there was water everywhere," said Mary Moore, mot...
    A raging fire happens in Roseville and of all places to be struck by lightning - the steeple of the New Life Church of God in Christ.Pastor Darrell Moore and his family are devastated."I got here and I found out I really didn't have a church anymore, " he said. Moore was attending a Sunday evening service at another church, when a member of new life called him repeatedly. When he finally answered, it was bad news."The fire department was here, there was water everywhere," said Mary Moore, mot...
  • Charges to be determined after teen dies in car crash

    Charges to be determined after teen dies in car crash

    Monday, July 28 2014 7:59 PM EDT2014-07-28 23:59:07 GMT
    Seven teenagers were on their way back from a bonfire late Friday night. A 16-year-old girl was behind the wheel of the Ford Expedition with her mom also in the car.
    Seven teenagers were on their way back from a bonfire late Friday night. A 16-year-old girl was behind the wheel of the Ford Expedition with her mom also in the car.
  • Local NewsLocal NewsMore>>

  • Prosecutor to discuss sex-assault allegations against former Tigers pitcher Evan Reed

    Prosecutor to discuss sex-assault allegations against former Tigers pitcher Evan Reed

    Wednesday, July 30 2014 7:27 AM EDT2014-07-30 11:27:48 GMT
    Evan ReedEvan Reed
    Wayne County Prosecutor Kym Worthy plans to hold a news conference to announce the results of the warrant review regarding former Tigers pitcher Evan Reed.
    Wayne County Prosecutor Kym Worthy plans to hold a news conference to announce the results of the warrant review regarding former Tigers pitcher Evan Reed.
  • Attorney wants investigation of city clerk over Arab-American voter suppression

    Attorney wants investigation of city clerk over Arab-American voter suppression

    Tuesday, July 29 2014 11:43 PM EDT2014-07-30 03:43:20 GMT
    It is the tale of two cities. one paints a picture of a meticulous Dearborn Heights city clerk, following the law and fighting for a fair election. The other a story of abuse of power, mishandled ballots and voter suppression.Fatima Abdrabboh is an attorney and Michigan's director of the Arab-American Anti-Discrimination Committee the largest chapter in the country. She is calling for a full-scale investigation into claims that Walter Prusiewicz mishandled ballots from Arab-American voters fo...
    It is the tale of two cities. one paints a picture of a meticulous Dearborn Heights city clerk, following the law and fighting for a fair election. The other a story of abuse of power, mishandled ballots and voter suppression.Fatima Abdrabboh is an attorney and Michigan's director of the Arab-American Anti-Discrimination Committee the largest chapter in the country. She is calling for a full-scale investigation into claims that Walter Prusiewicz mishandled ballots from Arab-American voters fo...
  • Warren grandparents upset after grandchildren see racist graffiti at park

    Warren grandparents upset after grandchildren see racist graffiti at park

    Tuesday, July 29 2014 11:15 PM EDT2014-07-30 03:15:40 GMT
    Tuesday afternoon Bruce and Lubertha Callaway took their grandchildren to Shaw Park in Warren when they saw something they couldn't believe.
    Tuesday afternoon Bruce and Lubertha Callaway took their grandchildren to Shaw Park in Warren when they saw something they couldn't believe.
Powered by WorldNow

WTXF-TV
330 Market Street
Philadelphia, PA 19106-2796

Phone: (215) 925-2929
Fax: (215) 982-5494

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices