U.S. Senators failed Wednesday to pass legislation to extend lower interest rates on federally-backed student loans. Republicans banded together to block the bill. But they have their own plan.
Interest rates of federally subsidized student loans have doubled to 6.8 percent. But there’s time for the rates to be reduced before students begin receiving their loans in late August.
The White House and most Senate Democrats support restoring interest rates on subsidized Stafford loans to 3.4 percent for one more year.
In the U.S. Senate Wednesday, Democratic lawmakers were unable to get the necessary 60 votes to bring the bill to a vote on the floor.
Sen. John Cornyn, R-Texas, says Republicans proposed lowering interest rates by tying them to the financial markets.
“This isn’t a fight that our students need, at a time where the average student has racked up a huge amount of debt,” Cornyn said, “to add insult to injury by allowing these interest rates to go up rather than dealing with this on a bipartisan basis.”
Under the Republican plan, if the economy improves as predicted, student loan rates will rise with the markets.
Democrats say that would put too much financial burden on students.
Cornyn says the Democrats’ plan could cost the government $6 billion.
As negotiations continue, both parties say they agree on one thing: a 6.8 percent interest rate is too high.