The interest on federal student loans is scheduled to jump from 3.4 percent to 6.8 percent in July, unless congressional action is taken. Student groups and President Obama have been among those advocating such an intervention to save students thousands of dollars in additional college debt.
Yesterday, U.S. Rep. Karen Bass (D-Calf.) offered an amendment to prevent Stafford Loan interest rates from doubling this summer.
"Our nation's students are facing unprecedented crippling debt before they even enter the workforce," said Rep. Bass. "There's no reason that if advancing one's education is the answer for ensuring success within our country, students should not have to leave college with as much debt as a mortgage would cost."
Without action, the interest rate on need-based federal loans would lead to an average increase of $2,800 in borrowing fees for nearly 7 million students.
Bass proposes paying for the lost revenue that would result from the amendment by repealing tax deductions on corporate jets, stopping subsidies to major oil companies, closing loopholes in the corporate-tax system that encourage companies to ship jobs overseas, and cancelling the tax cuts for millionaires after they expire at the end of 2012.
The amendment follows the introduction of the FY 2013 federal budget proposal by Rep. Paul Ryan (R-Wis.), which calls for tighter eligibility for Pell Grants and a change in the accounting mechanism for federal student loans.