WASHINGTON – The U.S. Senate rejected a Democratic-led attempt Wednesday to temporarily restore lower interest rates on Stafford subsidized student loans.
Democrats needed 60 votes to continue forward with the bill but fell nine short.
The Senate’s bill would have allowed the Stafford subsidized loan interest rate of 3.4 percent to continue for another year. It also would apply retroactively, protecting students who took out loans during the 6.8 percent spike.
Most Democrats, including Sens. Michael Bennet and Mark Udall of Colorado, supported the bill.
Bennet spokesman Adam Bozzi said Bennet “would like to see (student-loan interest rates) lock in for another year.”
Interest rates on Stafford subsidized student loans doubled July 1 to 6.8 percent after Congress failed to pass legislation keeping the lower rates.
Negotiations to lower those interest rates will continue as Republicans and Democrats scramble to reach a compromise before their monthlong recess in August.
Without congressional action in the coming weeks, the increase could mean an extra $2,600 for an average student returning to campus this fall, according to Congress’ Joint Economic Committee.
The Republican-dominated House passed a bill in May linking the Stafford subsidized student-loan interest rates to the 10-year Treasury notes. The interest rate on the Treasury note that year would be combined with a base 2.5 percent. Thus, this year’s interest rate would be 4.6 percent because the Treasury note currently has a 2.1 percent interest rate, according to the Congressional Budget Office.
In a news release Wednesday, the White House urged the Senate to pass the House’s bill, saying lower rates would save 7 million students approximately $1,000 each.
However, Senate Democratic leaders did not approve the bill because it did not cap interest rates from rising exponentially under poor economic conditions.
Last year, Congress extended the fixed rate of 3.4 percent right before its expiration on July 1, 2012.
Interest rates hit home
At Fort Lewis College, an average 1,700 students annually have taken out Stafford subsidized student loans during the last five years, said the school’s public affairs officer, Mitch Davis.
Durango’s Emily Gorman is one of those 1,700.
“Yes, I’m definitely worried, but I’m trying not to think about it right now,” the FLC senior said Wednesday afternoon.
Gorman wants to attend graduate school in San Diego, but her mounting student debt might prevent her from reaching that dream.
FLC’s 2011 graduates left school with an average $18,780 of student debt, which is lower than the state average of $22,283 and national average of $26,660, according to the Project on Student Debt.
Gorman is working three jobs this summer – as a barista at Steaming Bean Coffee Co., an admission ambassador at FLC and the occasional baby-sitting job – to save money.
However, Davis said he is not worried yet for students because the Stafford subsidized loan does not begin accruing interest until after graduation.
“That will hopefully give Congress more time to figure out a solution,” he said.
FLC is dealing with rising interest rates by “keeping the numbers” in front of students through their student accounts, Davis said.
“It’s not a good thing,” he said. “But it’s not the end of the world, either.”
The Associated Press contributed to this report. Paige Jones is a student at American University in Washington, D.C., and an intern for The Durango Herald. Reach her at email@example.com.