Time for a deal on student loan rates - ABC 33/40 - Birmingham News, Weather, Sports

Time for a deal on student loan rates

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Same song, second verse. Without action by Congress, federal subsidized Stafford Loan  interest rates will double July 1, 2013. Congress faced the same issue last year. The solution then, may well be the solution now; pass a short-term extension.

The White House and House Republicans each has a plan - surprisingly not that far apart. Both tie the interest rates on student loans to the interest on a ten-year Treasury note. Next year, that rate is expected to be 2.5%, climbing to just over 5% in 2018. Here's the difference. Under the Republican plan, a student who borrows next year could see the interest rate rise every year after that with a cap at 8.5%. The President's plan would allow students to lock in rates for the life of the loan, but there is no cap as to how high the interest could be when the money is borrowed. 

Neither party wants to see student rates go from 3.4% now to 6.8% July 1. Unless Congress acts quickly to reach a compromise, the best students can hope for is another stopgap measure. If the interest rates go up, the President says student would pay an extra $1,000 over the life of the loan.

Republican leadership is not impressed with what they term "petty politics and campaign gimmicks." At the White House Friday morning, the President surrounded himself with several college students for a "Rose Garden" news conference, pushing Congress to act.

A blog post from House Speaker John Boehner's (R-Ohio) office said Republicans share the goal to prevent student loan interest rates from doubling. The post called Friday's event at the White House nothing more than a showcase for "stunning cynicism."

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