Friday, June 08, 2012 By Diana Diaz
Graduation cap sits atop a stack of money. - Tom Schmucker
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On
July 1, federally subsidized student loan interest rates, which are
currently 3.4 percent, will increase to 6.8 percent unless Congress
decides to act. Both the Republicans and Democrats claim they want to
keep interest rates low; however, the method of doing so is causing
controversy and tension between the two parties, which is impeding
compromise on how to resolve this issue, according to The New York
Times.
Interest
rates on loans subsidized by the government were lowered by the 2007
College Cost Reduction and Access Act from 6.8 to 3.4 percent for four
academic years, according to The Washington Times. The bill is set to
expire on July 1; if Congress does not make a decision before then,
interest rates will increase to 6.8 percent.
A
rise in interest rates would cause students to pay an average of $1,000
more per year in interest on student loans. If rates remain low, 7
million students would be protected from doubling interest rates,
according to cbsnews.com.
“If
I thought I was going to be in debt before, a rise in student loan
interest rate has definitely reassured me that I will be,” senior Kayla
Brown said.
As
the deadline approaches, Obama has highlighted this issue in his
campaign for the next presidential election. According to the New York
Times, Republicans say that Obama is using this issue to gain the youth
vote because students wish to keep interest rates low and Republicans
believe this matter could be handled without so much media attention.
On
May 8, Republicans rejected the Democrats’ bill to extend the effects
of the College Cost Reduction and Access Act. As reported by the New
York Times, Republican senator Mitch McConnell of Kentucky said, “We all
agree we’re not going to let the rate go up.” However, Republicans feel
like Democrats are not handling the situation sensibly.
The
conflict among the two parties is how the cost of keeping student loan
interest low -- $6 billion, according to the Congressional Budget Office
-- will be paid for. Both parties have proposed their own methods of
paying off this debt, but neither party agrees with the other’s plan.
Democrats want to cut off tax breaks for oil and gas companies, while
Republicans have suggested taking money from Obama’s health care program
savings, according to the Washington Times.
Guidance
counselor Eileen Cuellar said she doesn’t think the money to keep
student loans low should be taken from health care because “every
citizen should have health care.” Cuellar said that if interest rates
double, it will have an impact on what type of colleges students pick.
“A larger amount of students will attend community colleges rather than a four-year college,” Cuellar said.
In
2011, students took out twice as much in loans as students the decade
before, amounting to $112 billion dollars. This leaves America with a
debt of $1 trillion in student loans, which is higher than America’s
credit card debt, according to usatoday.com.
“At
this rate, higher education appears to be a luxury rather than a need,
and that is the total opposite of reality, especially for those
struggling financially,” senior Omar Rios said.
Rios
said he thinks Obama did a good job in putting so much attention on the
issue because it creates pressure to resolve the issue.
“Both
parties need to put their differences aside and create the best
solution that won't negatively affect neither the economy nor students,
because they both correlate,” Rios said.
Senior
Brandi Morrison said that if interest rates go up, a lot of students
will end up dropping out of college because they would be in debt.
“That is a lot of money for education,” Morrison said.
Brown
said she thinks that the money needed to keep student interest rates
low should be taken from rich oil and gas companies rather than from
people who need to utilize every penny they own.
“It
just convinces me more that students in urban areas are less likely to
attend great colleges due to the increase in interest rates, which will
make college more expensive.”