Analysis
Every day, it seems there is another story in the newspaper or on television warning about the doubling of the interest rates of federal student loans if Congress does not act by July 1.
While that is enough to make many Southeast Community College students nervous, a look at the numbers and political reality of the situation should ease the fears of many that the cost of college is about to get even higher.
Even though Senate Republicans blocked a Democratic proposal that would have kept the current 3.4 percent interest rate of the subsidized Stafford loan from rising to 6.8 percent on July 1, both parties agree that the rate should remain where it is.
The hold up in approving the rate extension lies in how each party wants to pay for keeping the lower rate.
Democrats want to pay for the estimated $6 billion dollar cost of the extension by closing a tax loophole that would raise Social Security and Medicare payroll taxes on some wealthy stockholders of private companies which has led to the Republican opposition.
Republicans have offered a bill, co-sponsored by Nebraska Sen. Mike Johanns, which would pay for the bill by eliminating the Prevention and Public Health Fund from the 2010 healthcare law.
This measure already passed the Republican held House on April 27.
Action on the loan rate may stall as both sides wait for the Supreme Court to rule on the healthcare bill. If the court rules the measure unconstitutional it may free both sides from having to look like they gave in to the other.
Republicans can claim that they did not raise taxes, while Democrats will not have to weaken the healthcare law that they invested so much in passing.
Even if nothing is done and the rate increase does take place, SCC students will not feel the effects immediately. The increase only applies to loans taken out after July 1 of this year and cannot be applied retroactively.
Once payment begins on the Stafford loans, an SCC student who is subjected to the higher rates would see their loan payments increase by about $6-a-month per every year that they received the loan at a higher rate than what they would be paying under the current loan according to Fastweb.com publisher Mark Kranowitz.