American students are taking on more and more debt to finish their educations, a crisis that some say could be as bad as–or worse than–the 2009 collapse of the housing bubble. And politicians are facing tough decisions to try to prevent another economic disaster after student loan interest rates doubled from 3.4 percent to 6.8 percent last week when Congress failed to come to an agreement before the July 1 deadline.

Now that representatives have returned to Washington after heading back to their districts for the Fourth of July recess, discussion of a compromise on need-based Stafford loan rates has resumed. A new agreement could retroactively lower interest rates for loans extended after July 1 of this year.

Rep. Robert Pittinger (R-N.C.) and Rep. Rob Andrews (D-N.J.) both stopped by The Morning Briefing with Tim Farley on POTUS Politics to talk about their respective parties’ plans to solve this crisis. Democrats have proposed a one-year extension of the current 3.4 percent rate — the same solution that was reached in June of last year and expired July 1. A Republican proposal would tie student loan interest rates to the 10-year Treasury borrowing rate of 2.5 percent — a plan similar to one put forth by the White House. By 2017, however, interest rates tied to the Treasury could exceed 6.8 percent.

“We want to ensure that students are able to go and get loans at a decent rate and be out there in the marketplace where they can find jobs and be productive,” Pittinger said. “What we’re trying to do is come up with a policy that would be fair and fiscally responsible.”

Andrews agreed that it is imperative for Congress to find a solution.

“The reality for a lot of families is that a doubling of student loan interest rates makes college even more difficult to pay for,” Andrews said. “It’s incumbent upon us to fix it.”

Listen to the clips for an in-depth explanation of what doubling student loan interest rates mean for college students and more information about both parties’ proposals.

Powered by VIP