in 2007, then-Speaker Nancy Pelosi passed legislation that temporarily lowered the interest rates on the federally subsidized Stafford Loans from 6.8% to 3.4%. The extension would last until July 2012, when the rates double to 6.8%, partly as a budget trick to offset the original costs."We are offering a short-term remedy to freeze the interest rate on subsidized federal Stafford loans for one year ensuring that the federal government subsidize the students, not special interests," said RI Senator Jack Reed. "President Obama has called this a make or break moment for the middle class and he is right. It is also crunch time for Congress, which has 66 days to act. If we don't, 7.4 million college students will see their interest rates double on July 1. That's a lot of disappointed students and a lot of moms and dads who want their kids to go to college or continue in college."
Republicans question the how the government could pay for the $6 billion subsidy to extend the rate. And many ask how will it help control tuition costs. If it even could. In 2011, costs at the average public university rose more than 5% for in-state students, or about $1,100. The average tuition at public universities rose more than 8%. By comparison, the rate of inflation was 3%.Senate leaders plan take up the bill in the coming days. Republicans say they are willing to consider the measure as long as there is a way to pay for the extension.
In 2010, total student loan debt exceeded credit card debt. It may not be long before this bubble bursts, hurting the very students who need help the most.