Over seven million college students will see their subsidized student-loan rates double on July 1 if Congress can’t reach a compromise to avert the hike. In the meantime, House Republicans—having acted first this time—are using the issue to bludgeon Democrats.
With federal subsidized Stafford loan rates set to spike from 3.4% to 6.8%, House Republicans passed a bill on May 23 that would tie the rate on the popular loan to the yield on the 10-year Treasury note. The move partly mirrored a plan put forth by President Obama, who also proposed to tie lending rates to market forces. But despite the similarities between the President’s proposal and the House GOP plan, the White House threatened to veto the GOP bill, claiming that it “would impose the largest interest rate increases on low-and middle-income students.”