U.S Sen. Tammy Baldwin, D-Madison, is calling on Congress to cap student loan interest rates at 3.4 percent for one more year.
On Monday, the interest rates for government-backed Stafford loans doubled from 3.4 percent to 6.8 percent after Congress failed to agree on a measure to cap the rates in the short or long term. Subsidized Stafford loans account for about 25 percent of direct federal borrowing by college students.
When Congress returns next week from its Fourth of July break, it is expected to vote on a Senate Democratic proposal that would retroactively lower the rate to 3.4 percent for another year.
Baldwin held a joint press conference Wednesday with University of Wisconsin students, who talked about their struggle to pay student loans.
Baldwin said the expected vote next week would be only the "first step" toward making college more affordable for students across the country. She said the country also needs to look at other avenues for student debt relief and a separate measure that would properly inform students about the cost and terms of private student loans.
"We have got to constantly ask ourselves how college can be made affordable and accessible to all," Baldwin said on the UW-Madison campus. "How we can make it a pathway to the middle class, not a pathway to indebtedness."
President Obama has been urging Congress for months to reach a compromise on the loan rates after lawmakers went through this same gridlock last summer, only to vote to extend the 3.4 percent rate for a year.
The White House estimates the average savings for Wisconsin students who have Stafford loans would be $968 over the life of their loans if the rate is kept at 3.4 percent. According to an interactive White House map, Wisconsin had 163,427 student borrowers in 2012.
Baldwin said that attempts to reach a compromise with congressional Republicans have not been fruitful and said the GOP version of the bill was making the situation worse because it could allow those interest rates to soar above the current 6.8 percent rate. She also said lack of agreement on the caps within Democratic ranks was mainly the result of the looming deadline they faced to work out a short-term fix.
Fortune magazine lays out the options for Congress and notes that the interest rate jump isn’t hitting any student immediately because it applies to loans taken out after July 1 and most students won’t sign for those until the beginning of the school year.