WASHINGTON -- Sen. Mary Landrieu, D-La., is opposing a proposed compromise on student loan interest rates. Landrieu said she prefers a temporary extension of the current 3.4 percent interest rate for subsidized student loans. She opposes the compromise, in part, because it has no cap on future interest rates and could leave students and their parents with a major...
WASHINGTON -- Sen. Mary Landrieu, D-La., is opposing a proposed compromise on student loan interest rates.
Landrieu said she prefers a temporary extension of the current 3.4 percent interest rate for subsidized student loans. She opposes the compromise, in part, because it has no cap on future interest rates and could leave students and their parents with a major "financial problem" in the future.
"This is a very serious issue for our students," Landrieu said Wednesday during a press call with three Louisiana college students. If Congress doesn't act, interest rates are scheduled to double from 3.4 percent to 6.8 percent on Monday.
About 83,000 Louisiana college students are in line for substantial increases in student loan interest rates, according to the White House.
The bipartisan compromise, offered by Sens. Richard Burr, R-N.C., and Joe Manchin, D-W.Va., would establish a variable rate tied to the yield of 10-year treasury notes. A Senate staffer said that would produce a rate of 3.7 percent, based on today's market conditions. But there is no cap and that's the problem for Landrieu and other Senate Democrats.
A House-passed alternative would allow for increases on a measure likely to produce higher interest rates than the Senate bipartisan proposal. It too, though, would avert a sudden doubling of rates.
Landrieu said it's important for the Senate to act, but do so in a way that doesn't create such high interest rates as to make college unaffordable to low and middle-income students.
Louisiana students, she said, already face large budget cuts in the state's university system, which she blames on Gov. Bobby Jindal. The governor has defended his education funding as sufficient to protect priority education needs while recognizing state budget limitations.
Landrieu also expression opposition to an Obama administration plan to tie college loans to an adjustable system based on market conditions because it would create a surplus that would go to deficit reduction. Landrieu said she's all in favor of reducing the deficit, but given all the subsidies the federal government provides, including for business, it shouldn't "turn a profit" off the backs of students.
"These loans are not just a piggy bank for students," said Davante Lewis, McNeese State University Student Government president. He said students at his campus are very aware that interest rates are slated to rise - adding to their concerns about how they'll repay loans - especially given the challenging job market for graduating students.
It now appears unlikely Congress will fix the student loan problem ahead of Monday's slated interest-rate doubling. But some lawmakers are still predicting a retroactive fix later in the summer.