According to ABC News, interest rates on the aforementioned loans were scheduled to double on Monday, July 1.
Rates will double from 3.4 percent to 6.8 percent since Congress failed to achieve a compromise before its weeklong recess, which commenced Friday.
To those who have taken out Stafford loans, they can rest assured that interest rates will remain at current rates. The increase will only apply to new loans beginning July 1, according to the aforementioned report.
Subsidized loans are often $3,400 per year, and, with the new rates, students will pay roughly $1,250 more in interest over the ten-year life of the loan, ABC News further reported, citing a brief from Senator Amy Klobuchar of the Joint Economic Committee.
In any case, while rates may go up, Congress retains the ability to pass a retroactive law taking back the increase.
“[R]ather than take up a bipartisan solution supported by President Obama and House Republicans, Senate Democrats are going to go ahead and let student loan interest rates double on Monday,” House Speaker John Boehner stated, according to ABC. “Democrats went from crowing about a ‘political boon’ to saying ‘let’s put this off for a year.’”
Democrats responded, as might be expected, saying that their efforts to keep rates constant while closing tax loopholes has been fiercely turned down by Republicans, preventing compromise.
“There is no deal on student loans that can pass the Senate because Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families, instead of closing tax loopholes for the wealthiest Americans and big corporations,” Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid Reid, told Fox News, according to the publication. “Senate Democrats continue to work in good faith to reach a compromise but Republicans refuse to give on this critical point.”
The Senate plans to vote on July 10 on a one-year extension of current interest rates, according to the aforementioned report.