Congress Blows Town Without a College Loan Fix
The nation's capital is emptying out and members of Congress have officially left town for the Fourth of July holiday -- making their escape without passing a student loan fix.
That means the interest rate on federal loans available to low-income students will double on Monday.
What's likely to happen is this: Congress will retroactively extend current rates for a year, then take up the trickier question of a long-term fix when the Higher Education Act comes up for reauthorization in 2014.
The scheduled increase from 3.4 percent to 6.8 percent applies to new subsidized Stafford loans, which represent about 35 percent of the education loan market. It wouldnt affect the 37 million Americans already shouldering nearly $1.2 trillion in debt. The July 1 deadline does not affect unsubsidized Stafford loans available to wealthier students (about two-thirds of subsidized Stafford loans are awarded to students with family income of less than $50,000) nor PLUS loans for parents and graduate students, which together make up the bulk of federal lending and already have high interest rates.
Congress did nothing -- to halt the loan-interest increase or to help former students, many of whom can't find employment, drowning in college loan debt. Nothing at all.
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