The subsidized interest rate on Stafford student loans doubled Monday, following top Senate Democrats’ rejection of a bipartisan compromise supported by the president.
As the U.S. Senate debated comprehensive immigration reform for days last week, the student loan clock was quietly counting down. Now, with legislators on vacation for Independence Day week, the interest rate for undergraduate student borrowers has automatically increased from 3.4 percent to 6.8 percent.
Students may never have to pay the higher rate, however. Iowa Democratic Sen. Tom Harkin, who chairs the Senate education committee, wants Congress to change the interest rate retroactively, once the legislative session resumes. His fix would set interest rates at 3.4 percent for the next two years — a solution favored by Senate Majority Leader Harry Reid, a Nevada Democrat.