After weeks of warnings from both sides of the aisle, student loan interest rates are set to double today with the arrival of the July 1 deadline.
Though the House passed the Smarter Solutions for Students Act — which strikingly resembled President Obama’s own student loan bill — in May, Democrats failed to pass a bill in the Senate, causing rates to increase from 3.4 percent to 6.8 percent.
Several bills did go before the Senate, including bipartisan legislation from a group that included Sens. Joe Manchin (D-W.V.) and Tom Coburn (R-Okla.). However, Majority Leader Harry Reid (D-Nev.) rejected the bill and allowed the Senate to go into recess before passing legislation to resolve the issue.
“It’s disappointing that Senate Democrats left town without taking action on behalf of students and their families. Indeed, the divisions among the president and his own party are directly responsible for the current impasse that will now result in higher borrowing costs for students already coping with skyrocketing tuition bills,” House Speaker John Boehner (R-Ohio) said in a statement.
In an 11th hour deal in 2012, Congress came together in a rare bipartisan compromise to keep student loan interest rates from doubling, passing a bill that cost $6 billion.
But with the total cost of student loan debt topping $1 trillion this year — outpacing credit card debt in America — taxpayers are stuck with the burden of compensating for students unable to pay back their share if legislation intervened in market forces.
And dismal youth unemployment, rising tuition costs and the need for more loans creates the perfect storm for risky borrowing practices, leaving a mountain of debt on the taxpayers’ backs.
House Republicans, though, did introduce measures in their Smarter Solutions bill tying interest rates to the market, taking the burden off of taxpayers and placing responsibility on borrowers.
Despite the now-passed deadline, the Senate still has the ability to backtrack on the doubling, with a vote scheduled to proceed on a bill sponsored by Democratic Sens. Jack Reed (R.I) and Kay Hagan (N.C.), called the Keep Student Loans Affordable Act of 2013, after the July 4 recess.
