Student Loans Caught In Capitol Crossfire
"Congressional efforts to revamp how borrowing costs are set for millions of college students are being thwarted by the broader partisan fight over taxes and deficit reduction," The Wall Street Journal reports. "The White House said it hopes Congress will reach a deal later this month to reverse a July 1 increase in the interest rate on some new federal student loans. The rise to 6.8% from 3.4% will affect an estimated seven million students who take out certain federal student loans for the coming school year, representing about a third of all undergraduates. Student-aid administrators at the nations colleges and universities will begin assembling student-loan packages at the higher rates this week, said Justin Draeger, head of the National Association of Student Financial Aid Administrators. He said the money for most of those loans won't be disbursed until August, giving Congress time to retroactively lower the rates with minimal administrative consequences. But such a deal faces long odds. While the White House and lawmakers of both political parties agree on the general parameters of a plan, they remain deeply divided over key details. Some pertain specifically to student loans, including how high rates should be set, whether rates should be capped, and whether rates on a given loan should be fixed or vary annually. But other differences are broader, echoing other recent fiscal battles, such as the largely partisan disagreements over whether taxes should be raised to pay for lowering rates and whether some revenue from student-loan interest payments should be used to reduce the budget deficit."
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