Obama Proposal on Student Loans Draws Fire
Some say move to market-based rates could dampen college access
The Obama administration has found itself at odds with a key voting block—college students and their advocates—as well as many of its Democratic allies in Congress, because of an important, if technical, budget proposal that could have significant implications for college access.
In a move intended to stave off a doubling of interest rates on federally backed Stafford Loans over the summer, the administration is seeking to shift those interest rates from the current predictable, fixed-rate system to a market-based rate at the time of the loan. Right now, interest rates on subsidized Stafford Loans are set at 3.4 percent, but they're slated to jump to 6.8 percent in July, unless Congress and the administration act.
The shift to a 6.8 percent fixed rate could cost a student with $20,000 in debt—roughly the national average—an additional $12,000 over the life of their loan, according to an analysis by the Institute for College Access and Success, a nonprofit...
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