Americans with student loan debt may be starting to sweat, as the interest rate for these loans is currently set to double on July 1.
Fortunately, there are several legislative options on the table that, if enacted by Congress, could prevent the student loan crush from worsening.
According to The New York Times, here’s how some of the contenders break down:
- Senator Elizabeth Warren, Democrat of Massachusetts, introduced the Bank on Student Loans Fairness Act, which would cut the interest rate to 0.75% for one year. That’s the rate that big banks pay on loans from the Federal Reserve discount window. Her intention is that during the year that student loan rates are 0.75% Congress would come to a sustainable long-term agreement. (Good luck with that!)
- Representative John Kline, Republican of Minnesota, proposed that student loan interest rates should be tied to the government’s cost of borrowing. The rates would reset each year.
- President Barack Obama, in his budget proposal last month, suggested that rates be tied to the 10-year Treasury rate and fixed for the life of the loan.
One of the biggest divisions between camps is whether interest rates should be fixed or should fluctuate with the market. Variable rates would benefit students when rates are low, like they are now, but leave them vulnerable to rising rates in the future.
With college grads increasingly delaying life’s milestones—like marriage, buying a home and having children—because of their student loan debt, let’s hope that lawmakers can agree on a way to keep the burden from getting twice as heavy.