Home > Students > Obama Turns Up the Heat on Student Loan Rate Increase

Comments 1 Comment

There has been considerable discussion among federal lawmakers in the last several months about the way to best approach coming hikes to student loan interest rates, but little progress has been made.

In the final few days before federal student loan interest rates are set to double from 3.4 percent to 6.8 percent, President Barack Obama is making one final push to convince lawmakers in Congress to extend the current levels, according to a report from the Washington Post. If nothing is done by lawmakers, the increase would go into effect on July 1, and the higher interest rate would be applied to all federal student loans obtained after that date.

Interestingly, the current rates have not been extended despite top party officials on both sides of the aisle saying they want to do so, the report said. Democrats want to push through the new interest rate extensions, but Republicans say they’re willing to do so only if the cost of the extensions are cut from other areas of the federal budget. The extension would likely cost some $6 billion, but Republicans have criticized Obama and the Democrats for being unwilling to have negotiations over any cuts. GOP lawmakers have issued several proposals that have been dismissed by Democrats.

“For the president, this is just another sad example of the election year strategy of deflection and distraction,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said on the Senate floor, according to the newspaper. “We’ve proposed multiple, multiple solutions…It’s time to stop playing games. It’s time for the president to act.”

It’s believed that the average student who received a higher interest rate would pay an additional $1,000 over the time it takes to pay back their balance, and the increase would probably affect some 7.4 million people nationwide, the report said. One potential proposal, from a Democrat, that seems to be gaining a little traction is one that would increase premiums that companies pay for pension insurance.

Currently, the typical college student graduates with some $45,500 in student loans to pay back, in addition to several thousand more dollars in debt spread across a number of credit card accounts. These balances can make it difficult for many young people to gain financial independence soon after graduating.

Image: DUCKofD3ATH, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: Obama Turns Up the Heat on Student Loan Rate Increase | Wordpress Real Estate 9()

  • cindy

    So, what’s new? The dictatorship in full control. And these administrations are the same ones trying to oust welfare. Well, you raise college rates so high the average child cannot afford to go. And the ones that aren’t fortunate enough to be born with a silver spoon in their mouths are the ones that either have to work their asses doing it or flip burgers and become a medicaid handout or food stamp dependent. This country are making these choices for everyone . If not **** or get off the pot and do something by lowering and helping the ones who want the opportunity to better themselves without a **** load of debt ahead of them. But on the other side they can forever feed the lazy bums and welfare moms forever with their free government programs. Nonsense and all politics … I say until a better candidate comes along. Do not show up at any poles . That would serve them right when their votes booths are all empty with every American saying ENOUGH!! All I see in this country is lazy n dumber,fatter and the government being the biggest fat ass in the whole MESS. You figure it out..

  • Pingback: Obama Turns Up the Heat on Student Loan Rate Increase | Wordpress Real Estate 6()

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team