Federal student loan interest rates will double from 3.4% to 6.8% on July 1 unless Congress intervenes. As reported this morning in the Washington Post, a deal Senate has apparently been struck. The sticking point has been how to pay for the government subsidy that creates these below-market rates. Here's what the deal provides on that score:
The extension would be paid for by raising premiums for federal pension insurance, an idea acceptable to businesses because rules on how companies calculate their pension liabilities would be changed. [Ed note: Does this mean that pensioners are actually paying for the subsidized interest rates?] A senior Democratic aide said the pension proposals, which came from [Senator Harry] Reid, would generate $5.5 billion. Meanwhile, students would be limited in how long they could receive a federally subsidized loan to 150 percent of their program length — so, six years for a four-year undergraduate degree — a suggestion from Republicans.