Failure to strike a Congressional compromise on government-backed student loan interest rates could add unnecessary costs for legions of borrowers at Pennsylvania colleges, U.S. Sen. Bob Casey said Tuesday.
Interest on federally subsidized Stafford loans are scheduled to double to 6.8 percent from 3.4 percent on July 1, unless Congress takes steps to prevent the increase.
"Doubling the rate for federally subsidized college loans would be bad for students and families, and could have a serious impact on the economy," Mr. Casey said in a conference call. "This is an investment we make in our future workforce."
The increase would impact almost 400,000 students in Pennsylvania and add an average cost of $956 over the term of their subsidized loans, Mr. Casey said.
He and most other Democrats support a two-year extension of the current interest rate. Most Republicans support legislation linking the rate to financial markets.
The standoff should drive lawmakers to compromise, Mr. Casey said.
"We've got to find a path forward," he said. "Both parties understand the impact on students."
Seniors who recently graduated from the University of Scranton averaged Stafford loans of $25,627, including $15,771 in subsidized financing, said William Burke, director of financial aid.
Standard repayment of Stafford loans takes about 10 years, he said.
The political stalemate masks the support of both parties for continuing the program, Mr. Burke said.
"The important point is, it doesn't impact the availability of the funds at all," Mr. Burke said. "It only has an impact on undergraduate students who borrow subsidized Stafford loans."
Students seem to pay little attention to the issue, Mr. Burke said.
"I very much doubt that they are aware of the change," he said.
Contact the writer: jhaggerty@timesshamrock.com