Bill to keep student loan interest rates from doubling stalls in Senate

By:  Kitsap Peninsula Business Journal – Staff writer

A bill that would keep federally subsidized student loan rates from doubling in July fell short of the votes needed to move it forward for debate in the U.S. Senate. The vote June 6 on advancing the Student Loan Affordability Act of 2013 was 51-46, short of the 60 votes needed to move to debate.

If Congress fails to act, student loan interest rates will double from 3.4 percent to 6.8 percent on July 1. According to the U.S. Department of Education, that would impact 104,863 students in Washington state who carry more than $390 million in subsidized Stafford Loans. The Project on Student Debt reports that Washington state college seniors who graduated in 2011 had an average of $22,244 in student loan debt.

“We cannot allow access to an affordable, quality education to slip away from American students,” Sen. Maria Cantwell (D-Wash.) said in a news relase after the vote.

Cantwell said the bill supported by Democrats is “a common-sense plan” that would prevent a significant cost increase to students and their families who take out loans to pay for college. “I’m disappointed that this bill did not advance today, but I look forward to working with my colleagues to pass legislation in the next three weeks that will prevent student loans from skyrocketing,” she said. “We need thousands of educated workers to fill high-skilled jobs. Now is not the time to make a college education harder to access for middle-class families.”

In June 2012, Cantwell joined a Senate majority voting to approve a one-year extension of current student loan rates to keep subsidized Stafford student loan interest rates from doubling. Cantwell was a co-sponsor of a bill last year to prevent the rate hike and permanently cap the subsidized Stafford student loan interest rate at 3.4 percent.

A bill backed by Senate Republicans to establish a market-based variable interest rate on student loans also failed to get the required 60 votes to advance. That bill would establish a student loan rate at 3 percentage points above the U.S. Treasury 10-year rate.

According to the U.S. Consumer Financial Protection Bureau, the total amount of U.S. student loan debt is more than $1 trillion.