If Congress doesn't act by July 1, college loan interest rates will double from 3.4 percent to 6.8 percent. But Washington is still dawdling even as students worry about whether they will be able to stay in school.
The proposed remedies range from a bill offering low interest rates that could become prohibitively high to a measure that would reduce the rate to 0.75 percent. The divide suggests that Congress isn't ready to make a deal. But students, like businesses, need predictability to make five- and six-figure educational investments.
House Republicans favor a bill sponsored by Rep. John Kline (R., Minn.) and passed by his chamber last week. It would charge students the 10-year Treasury-note rate, which is currently around 2 percent but is expected to rise, plus 2.5 percentage points for undergraduates, capped at a rate of 8.5 percent. Graduate students and parents would pay the Treasury rate plus 4.5 percentage points, capped at 10.5 percent. The rates would vary from year to year based on market conditions.