The Education and the Workforce Committee of the U.S. House of Representatives approved a bill last week that would change the financing of college loans and, according to the Congressional Research Service, make it more expensive for students to borrow.
The Smarter Solutions for Students Act, supported by House Republicans, would tie student-loan interest rates to the 10-year Treasury note, plus 2.5 percent, for both subsidized and unsubsidized Stafford Loans.
The proposal is intended to address the automatic interest-rate hike from 3.4 percent to 6.8 percent on subsidized student loans that will kick in if Congress fails to act by July 1.
The nonpartisan research service outlined various examples of the costs. It found, for instance, that students who borrow the maximum amount of $27,000 of unsubsidized and subsidized Stafford Loans over five years would pay $12,374 in interest compared with $10,867 in interest under current law if rates are allowed to double to 6.8 percent, or $7,033 if rates stay at 3.4 percent.
The new proposal would also affect borrowing fees for loans parents take out.
Committee Democrats offered amendments to keep interest rates at 3.4 percent and give lawmakers additional time to seek a long-term strategy to address student loans and college affordability, but the proposals did not advance.
