Are You Ready for Student-Loan Rates to Skyrocket?

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
Will be used in accordance with our Privacy Policy
Are You Ready for Student-Loan Rates to Skyrocket?
3 min read
Opinions expressed by Entrepreneur contributors are their own.

UPDATE May 9, 2012: Senate Republicans yesterday blocked consideration of a bill that would prevent the doubling of certain student-loan interest rates in July. Meanwhile, student borrowers remain in limbo.

The interest rate millions of undergrads and graduate students pay on Stafford Loans, may double this summer should Congress fail to agree on a measure that would prevent the hike.

The Republican-led U.S. House of Representatives today approved a $5.9 billion bill that would preserve the low rates on federal Stafford Loans, which are fixed-rate loans available to undergraduate and graduate students. But to pay for the measure, the House elected to pull funds from a provision in the health care law that helps states and local governments pay for everything from mammograms to anti-obesity campaigns.

Though Senate Democrats share the House's goal of preserving low rates on student loans, they would pay for it by closing a tax loophole that allows wealthy individuals who earn more than $250,000 a year to bypass paying Medicare taxes on their earnings. That measure is expected to save $6 billion over 10 years.

The upshot from either bill passing would mean that students will get a one-year reprieve on seeing their Stafford student-loan rates double from a current 3.4 percent on July 1. No doubt that's a welcome situation for many young entrepreneurs. But the question is, will Congress agree to a compromise? At present, the chances don't look promising.

Related: SBA Chief Touts Entrepreneurship to Recent Grads in Twitter Q&A

Senate Majority Leader Harry Reid, (D., Nev.) opposes the House measure, while the Obama administration threatened to veto it. And it's not hard to imagine that House Republicans will have a hard time coalescing behind the Senate bill, which will come up for a vote on May 8.

Still, there is precedent in slashing the health care law for the sake of a popular bill. To pay for the hard-fought payroll tax cut extension package that passed earlier this year, Congress did reroute $5 billion from a fund within the health care law called the Prevention and Public Health Fund.

Related: Seven Ways to Effectively Juggle Business and School

Cutting into that fund again is being criticized as yet another attack on women, as that $15 billion fund largely helps provide services to women such as pregnancy-related care and cancer screenings. Additionally, congressional Democrats suggest that further cuts could undermine the potency of the health care law.

What would you sacrifice for Low student-loan rates?Leave a comment and let us know what you think Congress should do.

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Starting, buying, or growing your small business shouldn’t be hard. Guidant Financial works to make financing easy for current and aspiring small business owners by providing custom funding solutions, financing education, and more.

Latest on Entrepreneur

Entrepreneur Media, Inc. values your privacy. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site (both directly and through our partners). By continuing to use this site, you are agreeing to the use of that data. For more information on our data policies, please visit our Privacy Policy.