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Senate Does Nothing as Student Loan Rates Set to Double

Borrowing rates for federal student loans will double from 3.4 percent to 6.8 percent on Monday.
 
 
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While Democrats were busy celebrating victories for same-sex marriage and abortion rights, Congress screwed over more than 7 million college undergraduates after failing to agree on a student loan plan.

As a result of political stalemate in the Senate, borrowing rates for federal loans is set to double from 3.4 percent to 6.8 percent on Monday—further exacerbating the nation’s already-harrowing student debt crisis. If Congress fails to retroactively extend current rates, current college students will acquire an additional $1,000 in annual debt.

Senate Democrats want to freeze the current rate of 3.4 for another year, which was already extended once. A bipartisan plan but forth by Joe Manchin (D-WV) and Richard Burr (R-NC) would tie student loan rates to the government borrowing costs, allowing for fluctuation by the year. The Obama administration, meanwhile, also supports tying Stafford rates to markets, but would not allow for fluctuation.

As Washington bickers over the fate of 7 million students’ futures, the nation’s burgeoning student debt is poised to get even worse. A report from the Joint Economic Committee showed that student debt has skyrocketed from $550 billion in 2007 to $1 trillion this year, leading some experts to fear a bubble reminiscent of the mortgage crisis. At the same time, about 37 million students currently bear the burden of outstanding loans.

Steven Hsieh is an editorial assistant at AlterNet and writer based in Brooklyn. Follow him on Twitter @stevenjhsieh.