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Senate Battle Over Student Loans Coming to an End?

WASHINGTON, D.C. -- Sen. Roy Blunt (R-Mo.) said coming to a compromise is doable, if Senate Democrats get on board.
WASHINGTON, D.C. -- On July 1, Congress allowed interest rates on student loans to automatically double for 7.4 million university students. They went from 3.4% to 6.8% on subsidized Stafford loans in an instant.

“What my parents are making isn’t doubled,” said Alexis Rogers, a University of Missouri senior. “My income isn’t doubled. So how am I supposed to pay double the interest?”

Rogers says after three years at a public university, her debt is around 20,000 dollars.

Andrew Kelly, resident scholar on education policy studies at the American Enterprise Institute, said Senate Democrats don’t want all the money gained from higher loan interest to go towards reducing the deficit. But, he said, it isn’t clear how much money that actually is.

“All of the deficit reduction talk is sort of based on this big notion that we have this big pot of profit to sort of sprinkle around and pay down the deficit with from the student loan program but that all depends really on how we do the accounting, Kelly said.

Sen. Roy Blunt (R-Mo.) said coming to a compromise is doable, if Senate Democrats get on board.

“Republicans in the Senate are closer to both the house and the administration, on this issue, than Democrats in the Senate have been and it’s an easily resolved issue,” Blunt said.

“I think there’s a compromise we can find,” Sen. Claire McCaskill said. “To let the rates float slightly with hard caps so that a student would never face a big jump with an interest rate, and they would always know what the endgame would be, what is the maximum they would ever be required to pay.”

For Rogers, the idea of student loan rates climbing higher than they already are is unsettling.

“I know my parents are still paying off their student loans,” she said. “The fact that I’m in college and they are still paying off their student loans, I hope I’m not a part of that cycle.”

The House passed a bill back in May that would allow interest rates to float with the financial markets without a cap. But the Senate hasn’t been able to reach an agreement. Until now.

The compromise itself includes keeping interest rates low through 2015 and tying interest rates to financial markets. The key to the compromise is the rate cap. With the cap, interest rates won’t exceed the following:

•8.25% for undergraduate students
•9.5% for graduate students
•10.5% for parents

The Senate may be voting on the bill as early as tomorrow.


Macy Jenkins for KOLR10 News

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