U.S. Rep. Tim Walz, D-First District, joined students and faculty last week to urge Congress to pass a temporary freeze on student loan interest rates.
If Congress doesn’t act, interest rates on government-backed Stafford student loans will double from 3.4 percent to 6.8 percent July 1. The rate increase would cost the average student borrower $1,000 for each year of college over the life of a loan.
Walz said freezing the rate for two years is the first step in a longer journey toward finding ways to reduce tuition costs while providing adequate financial support to colleges and universities.
Under the recently approved House plan, a student who borrows money next year could see his interest rate rise every year after that, like an adjustable mortgage. It would peg new student-loan interest rates to yields on the 10-year Treasury note and set caps on those rates.
In contrast, the Senate plan would let students lock in rates at 3.4 percent for at least two years.
The White House opposes the House measure and has threatened a veto.
House Speaker John Boehner said its measure is a “responsible fix” and predicted the House and the Senate would reach a compromise in conference committee.
U.S. Rep. John Kline, who sponsored the House bill, was less optimistic. “One approach has almost nothing to do with another,” Kline told Bloomberg News. “Senate Democrats and some Democrats in the House are calling to kick the can down the road for two years so Congress can get together again and have a big political fight.”
A big political fight may be in order and some of it should be over student loans.
But most of it should be how we are pushing some of our college students into careers that have little likelihood of paying off that debt.