Congress is set to vote Wednesday on a bill that would delay the student loan interest rate hike passed last month and hold rates at 3.4 percent for one year.
"It is absolutely critical that Congress come together and pass this legislation to reverse this rate hike, and begin work on a long-term plan to make college more affordable for every student," Democratic Sen. Debbie Stabenow of Michigan, one of the 42 co-sponsors on the bill, told TheStreet.com.
The Keep Student Loans Affordable Act, S-1238, was introduced by Democratic Senators Jack Reed of Rhode Island and Kay Hagan of North Carolina. If passed, it would extend the 3.4 percent interest rate on need-based student loans for one year, paying for it by ending a tax break on tax-deferred retirement accounts, according to TheStreet.com.
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Interest rates on new subsidized Stafford loans jumped from 3.4 to 6.8 percent July 1
after a series of 11th-hour attempts to stop the increase failed to get approval June 27. The increased interest rates will reportedly cost students an additional $2,600, according to Congress' Joint Economic Committee.
With Congress about a month away from its summer recess, proponents of the bill are pushing to get it to a vote.
"We've made Stafford loan rates a priority but have a lot of things to do before we leave town in August," a senate source told TheStreet.com.
Some see the Keep Student Loans Affordable Act as simply a Band-Aid solution that won't solve the long-term problem, which is the rising cost of education.
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"Students taking out loans this fall are thinking, 'Thank you, Lord, I don't have to pay more now,'" Deon Jones, a senior at American University in Washington, D.C., told the Los Angeles Times.
"But we still have to deal with this problem. It's only going to get worse."
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