WASHINGTON (July 1, 2013) — We are disappointed that Congress was unable to agree on a solution to keep interest rates on federally subsidized Stafford loans from doubling today. By failing to pass a plan to keep interest rates from increasing to 6.8 percent, Congress missed an important opportunity to limit college debt for the millions of students who receive subsidized Stafford loans every year, most of them low-income.
But there is still time for Congress to adopt a fix that is good for students. To qualify as a good deal for student loan borrowers, though, any final plan must: Keep student debt at lower levels than the current doubled rate; include a cap that prevents rates from rising too high; protect other forms of financial aid; and tie interest rates to the actual cost of student loan programs. Furthermore, while it may be appropriate for borrowers to be asked to cover the costs of the program, rates should not be set to deliberately direct revenue to deficit reduction, balancing the budget on the backs of students.
With student loan debt at an all-time high, American students should not be required to pay even more for college just because Congress is unable to reach an agreement. The country needs more college-educated young people and we hope that Congress advances that goal by putting forth a proposal that protects students from skyrocketing student loan interest rates.