(The Root) — Without a miracle intervention from Congress — which is looking increasingly unlikely with each passing hour — interest rates for student loans from the federal government will double as of July 1. This means that after today, a student seeking a loan will no longer enjoy a 3.4 percent interest rate; instead he will see his rate become 6.8 percent.
While student-loan debt has become a reality and a challenge for an entire generation of American students, with that debt nearing $1 trillion and surpassing credit card debt, black students are disproportionally affected. According to a 2010 report from the College Board, “high debt levels are more prevalent among black bachelor’s degree recipients than among those from other racial/ethnic groups.”
During a Q-and-A at the Aspen Ideas Festival on Saturday, House Majority Leader Eric Cantor (R-Va.) cited the student-loan interest-rate crisis as a priority issue and expressed cautious optimism that a bipartisan solution could be reached, but that is looking increasingly unlikely. While Democrats have proposed extending the 3.4 percent rate for another year, thus buying more time to develop a longer-term solution, Republicans favor instituting long-term solutions now. One of their proposals would tie interest rates to Treasury bonds, which would potentially result in higher interest rates for students in the future, a possibility that concerns Democrats.
This is not the first time that student-loan interest rates have faced a steep increase and become a hot-button political issue. Last year the president spent part of his campaign touring college campuses and encouraging students to pressure Congress to act to prevent interest rates from rising. The effort worked, resulting in the continuation of the lower rates that are now once more in danger of being increased.
Following the president’s strategy last year, Democrats have begun taking out ads in college newspapers to try to sway students to pressure lawmakers. Seven million students seeking loans this year could be affected. During a press conference to encourage Congress to act to prevent the rates from doubling, President Obama said, “Higher education cannot be a luxury for a privileged few,” but increasingly it is.
The cost of attending public universities has increased 85 percent over the last decade. That reality, combined with this latest student-loan interest-rate debate, will likely renew further discussion about whether or not fewer students should attend college, a topic previously covered on The Root.