Ending Soon! Save 33% on All Access

Are You Ready for Student-Loan Rates to Skyrocket? As House and Senate members bicker over how to pay for maintaining low rates on certain federal student loans, a July 1 deadline looms.

By Diana Ransom

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.

Diana Ransom is the former deputy editor of Entrepreneur.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Career

Is Consumer Services a Good Career Path for 2024? Here's the Verdict

Consumer services is a broad field with a variety of benefits and drawbacks. Here's what you should consider before choosing it as a career path.

Business News

'Creators Left So Much Money on the Table': Kickstarter's CEO Reveals the Story Behind the Company's Biggest Changes in 15 Years

In an interview with Entrepreneur, Kickstarter CEO Everette Taylor explains the decision-making behind the changes, how he approaches leading Kickstarter, and his advice for future CEOs.

Business Ideas

87 Service Business Ideas to Start Today

Get started in this growing industry, with options that range from IT consulting to childcare.