By Carlin Sack for Binksty.com
Ever since total student loan debt surpassed the total credit card debt in the U.S., the national conversation regarding student loans has taken on an urgent tone. Now more students and graduates are worrying about paying for their education.
And this worry may be heightened yet again because interest rates on some federal student loans are set to double on July 1, if Congress does not act.
This interest rate increase would apply to federal subsidized Stafford loans, which help about 8 million low- and middle-income undergraduate students pay for school. The rate on Stafford loans is currently 3.4%, but is at risk of returning to 6.8%, which was the rate before the 2007 College Cost Reduction and Access Act allowed the decrease for five years.
In order to extend this temporary rate reduction and keep current Stafford rates at 3.4%, a few Democratic Congressmen, namely Senator Jack Reed of Rhode Island and Representative Joe Courtney of Connecticut, are working to strike the expiration language from the act.
If the Stafford interest rates double, some students could end up paying as much as $5,000 more over 10 years. But extending the rate reduction could cost taxpayers about $6 billion, according to The Washington Post.
So what is likely to happen? Well, President Obama supports keeping the interest rates at 3.4% through 2013, according to his fiscal 2013 budget. The Obama administration usually sympathizes with students struggling to pay for college and has publicly acknowledged that financing higher education is an important issue for young people today.
Not to mention that siding with young voters may prove to be vital for the administration during this election year. Obama seems to have realized the importance of supporting higher education and gaining support of young voters; he has spoken at about six colleges and universities since his State of the Union address.
Republican representatives do not necessarily advocate increasing student loan debt, but would prefer to make a college education more affordable in other ways instead of at a federal level.
But no matter the impact of Stafford loan interest rates on the presidential election this year, student debt in general has become a hot topic as student loan debt averages at $25,000 per student. One thing is certain: keeping college affordable and working to improve the economic outlook for young people in the U.S. should be a national priority.