Ending a months-long stalemate that threatened to drive up costs for students, President Obama and Congress agreed to extend for one year the current low 3.4 percent interest rate on subsidized student loans for college.
Without action by July 1, rates would have doubled to 6.8 percent for an estimated 7 million students, adding about $1,000 to the cost of a typical loan.
“Congress listened to students and their families and delivered a bill that stops student loan interest rates from doubling,” said Rich Williams, higher education advocate for US PIRG.
He said the agreement “is another important step in getting rising student loan debt under control.”
Student groups delivered more than 130,000 letters to Congress earlier this year supporting the low interest rate and continued to lobby on Capitol Hill. “A wave of student and borrower mobilization changed the political calculus,” Williams said.
The White House had made the extension a priority all year. The Republican-controlled House of Representatives had approved a one-year extension but would have paid for its $6 billion cost by cutting funds from the “Obamacare” health care law, prompting a veto threat from the White House.
The final deal would find the $6 billion partly through changes to treatment of employer pension plans.
