No action on student loan rates adds to confusion | www.myajc.com

The U.S. Senate failed to agree on a student loan bill Wednesday, leaving the federally subsidized Stafford loan interest rate to double from 3.4 percent to 6.8 percent and keeping students in limbo awaiting Congress’ next move.

Most Senate Democrats backed a bill Wednesday to extend the lower rate for another year, but they failed to reach a 60-vote threshold to move forward against a filibuster.

The result of the impasse, for now, is the higher interest rate for new federally subsidized Stafford loans. That means more than 7 million students in the upcoming school year are projected to pay an average of about $1,000 more per loan, according to federal estimates.

Students apply for loans annually, and the higher rate applies to all new loans. Existing loans are not affected.

The loans go to those who have financial need, with about three-quarters of the recipients coming from families making less than $60,000 a year. Just under half of all undergraduate students who borrow receive these loans.

A few Senate Democrats joined with Republicans on Wednesday to back a long-term alternative, tying all federal loan rates to 10-year Treasury bond rates. That type of approach also has been supported by President Barack Obama and House Republicans, though the specifics vary. The Obama administration on Wednesday publicly supported Senate Democrats’ one-year plan.

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