It passed the House of Representatives on Thurs.
Unless Congress acts, interest rates on new federally subsidized Stafford Student Loans will go up July 1st. The Republican-controlled House of Representatives on Thursday approved a bill which would freeze interest rates at 3.4% for a year, and then it would go up after that. "Essentially, they've got a variable interest rate which would leave a student vulnerable to interest rate hikes in the private market," says 8th District Democratic Representative Chris Van Hollen.
"The reason I oppose the House Republican Plan is that it's a little bit of a bait and switch," he says. "While the interest rate in the first year would be low, like our bill does, it will then reset each year."
Van Hollen says the GOP bill would make it difficult for college graduates to pay back their loans, as the rates would change with the market. He says legislation he's co-sponsoring would make that task a little easier. "For the coming year, it would freeze the current interest rate 3.4%. So that people who took out loans during that period of time would be guaranteed that throughout the life of their loan that their interest payments would be 3.4%," he says.
The legislation which passed the House on Thursday is heading to the Senate where it's not expected to receive a friendly reception. President Obama has said he will veto the measure if it reaches his desk.
The Republican Chairman of the House Education Committee, Congressman John Kline, says the GOP bill is a starting point for negotiations.