Spring recess is over for Congress this week, and the Senate’s first order of business is dealing with possible federal student loan interest hikes. The Senate is set to take up Democrats’ version of a bill that would stop federal loan interest rates from doubling come July 1. Republicans happen to agree with Democrats that stopping the interest rate hike, yet both parties have differing plans about who should pay for the costs.
Senate Democrats have proposed increasing taxes on high earners who own a private corportation. Republicans, who meanwhile, have suggested slashing a preventative health program in President Obama’s healthcare reform plan to finance their plan. The House approved a version of the Republicans’ plan on April 27.
Both plans would freeze interest rate hikes on Stafford student loans, which are meant for students from middle and low-income families, for just one more year. As Republicans and Democrats work to present themselves as the voice of that shrinking middle class in the race toward the November elections, student loan issue has become a galvanizing issue for both parties.
If a plan is not approved, students with subsidized Stafford student loans could see an extra $1,000 added to their debt loads. According to the Department of Education, 7.4 million students depend on Stafford loans to pay for school.