- The Enterprise
- The Recorder
Interest rates on some government-backed student loans are on track to double next month if Congress doesn’t act, and one group is warning this will cost Maryland students $95 million more on their loans.
The current 3.4 percent interest rate for subsidized Stafford loans is set to double July 1, when the 2007 law that led to the lower rate — already extended in 2012 for another year — expires.
The new rates are expected to affect about 105,000 students obtaining new loans in Maryland, according to the White House.
Each student’s projected debt would increase an average of $909 per loan, with a total cost to Maryland students of $95.6 million, according to the Maryland Public Interest Research Group.
Competing plans to address the issue are before Congress. One — sponsored by Sens. Jack Reed (D) of Rhode Island and Tom Harkin (D) of Iowa and supported by Maryland Sen. Barbara A. Mikulski (D) of Baltimore — extends the 3.4 percent rate for two years, giving lawmakers time to craft a more long-term solution.
Another, sponsored by Republican Sen. Tom Coburn of Oklahoma, ties the interest rate to the rate of 10-year treasury bills.
Democrats object to that proposal because it does not place a cap on the interest rates students will face, according to Reed’s office.
Mikulski said in a statement recently that the Reed plan, paid for by closing corporate tax loopholes, would help middle-class families who struggle to pay for college.
Coburn said in a statement that he was disappointed the chamber didn’t move forward on his plan, which would keep interest rates below 5 percent for the coming year.